Market Wrap: Bitcoin, Other Cryptos Continue to Plummet

Crypto prices whipsawed following the announcement that Binance would be purchasing one of its largest rivals, and then said it won’t.

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Crypto markets’ misery seemed boundless on Tuesday amid the ongoing fallout from crypto exchange FTX’s distress.

BTC, the largest cryptocurrency by market capitalization, was recently trading at about $16,300, a more than 10% decline to its lowest level in two years. Bitcoin has been swept up in the cryptocurrency industry’s latest crisis, FTX’s liquidity issues, a mass exodus from the exchange and proposed sale to rival Binance that collapsed. On Wednesday, CoinDesk reported that Binance was highly unlikely to follow through on its non-binding letter of intent after reviewing FTX’s internal data and loan commitments. The story was later confirmed to CoinDesk.

“This is another one of those catalysts,” said Bob Iaccino, Path Trading Partners co-founder and chief market strategist. “I wouldn’t be surprised if bitcoin went as low as $9,000, which for me, as someone who got out of bitcoin and is waiting to get in again, would actually be a positive.”

Ether was recently changing hands at about $1,150, off roughly 12% to its lowest level since July. Other major cryptocurrencies continued to plunge for a third consecutive day as investors fretted over every development in an industry already rocking from calamities involving crypto giants Terraform Labs, Three Arrows Capital and Celsius Network.

FTX’s FTT token had recently dropped almost 50% a day after plummeting about 80% and was trading at just $2.62. The Solana platform’s SOL token had recently fallen more than 45% to continue its downward momentum of recent days. Last week, CoinDesk reported that a copy of FTX sister company Alameda’s balance sheet showed the firm held $292 million of “unlocked SOL,” $863 million of “locked SOL” and $41 million of “SOL collateral.” Even Binance’s BNB token was down about 15% after outperforming most other cryptos on Tuesday.

The CoinDesk Market Index, a broad-based index designed to measure the market capitalization weighted performance of the digital asset market, was down 8%.

A day after U.S. midterm elections, stocks saw their first red of the week, with the tech-heavy Nasdaq and S&P 500 dropping 2.4% and 2%, respectively. The Dow Jones Industrial Average (DJIA) was off 1.9%. Safe haven gold ticked down slightly.

In an email, Edward Moya, senior market analyst for foreign exchange market maker Oanda, wrote that the FTX debacle and its much-admired CEO, Sam Bankman-Fried, has shaken an industry often criticized for its lack of guardrails.

“Sam Bankman-Fried was supposed to be bulletproof,” Moya wrote. “SBF was crypto’s ‘White Knight’ and the implosion of FTX means no one is safe. The stabilization period for crypto is over and now we wait to see if other contagion risks emerge.”

By James Rubin, Sage D. Young, Jocelyn Yang

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