At the beginning of the week, Bitcoin was around $21,000, but now it has fallen by $4,500. The collapse of one of the largest crypto exchanges, FTX, sinks the entire cryptocurrency market. The competitor Binance was supposed to escape the financial troubles, but the deal fell through. Binance is said to be unable to save FTX. Some businessmen do not hesitate to compare FTX’s current problems with the fall of the American bank Lehman Brothers, which started the financial crisis in 2008. A wave of forced sell-offs of crypto assets is expected.
FTX Crypto Exchange deal explained
Legitimate concerns about the solvency of the FTX exchange following a sharp drop in the price of its native token, FTT, have been dragging down the entire digital currency market in recent days. Binance CEO Changpeng Chao backed out of the deal between his firm and FTX after looking into the books of the bankrupt crypto exchange.
FTX boss Sam Bankman-Fried said it was “exploring all options.” “FTX is currently unable to process withdrawals. We strongly discourage deposits,” the FTX website states.
Bloomberg estimates that the cryptocurrency needs to fall below $13,000 to match the extent of previous declines. At this level, she could find a base for recovery.
He offered to help FTX after he sowed doubts about FTX’s cash reserves with his tweet on Sunday. Its founder, Sam Bankman-Fried, described such concerns as unfounded.
BitMex co-founder Arthur Hayes compared the current position of FTX to the American investment bank Lehman Brothers on the threshold of the global economic crisis. According to Hayes, the price of Bitcoin will go even lower.
Cryptocurrency Exchange and Cryptocurrencies
“It is high time that the services with their tokens do and publish an audit. I did not expect the difficulties of FTX,” says the founder of the online cryptocurrency academy Altclub Daniel Trojan. According to him, there will be more similar problems; for example, there is a threat with another significant cryptocurrency exchange, Crypto.com.
“I have been following them from the initial listing of their digital coin (ICO) until now. I experienced a different name, two tokens, changes to the terms of interest before expiration, deterioration of the terms of payment cards despite holding their tokens, unreal spending of money on the domain, and sponsorship. The company lays off 40 percent of employees, and so on. Over the years, I can’t feel that it’s run great. Maybe I’m wrong. Their app is great,” Trojan justifies his concerns.
At the moment, however, there are no reports that users would be unable to withdraw their cryptocurrencies from cryptocurrency exchange Crypto.com, for example. In addition, other entrepreneurs generally see the situation less dramatically.
We see the current events as only a short-term problem that will not significantly impact the world of cryptocurrencies. On the other hand, the mining machinery market registers a lack of supply compared to extreme demand; also, we dare to estimate that the market will turn around and grow again very soon.
Bitcoin along with other cryptocurrencies might be safe
Experienced Bitcoin holders are similarly reassured. The current uncertainty in the market primarily reflects the situation of centralized exchanges, which are not directly related to the functioning of virtual currencies. Those who keep cryptocurrencies in their digital wallet and not on the exchange have no reason to worry.
He will have access to his funds at all times and under all circumstances. Bitcoin et al., theoretically, do not need large intermediaries such as FTX or Binance for their basic technological functioning.