Why is FTX Token crashing? FTT plunges 80% wiping $2.5 billion from its market cap

With the ongoing controversy between two major cryptocurrency exchanges – FTX and Binance – and the latter dumping $500 million worth of FTT, it is no surprise that the FTX token’s price and market capitalization are taking a dramatic hit.

Indeed, the market cap of FTT has dropped from $2.97 billion to $568.9 million within 24 hours, as the price of FTX’s token declined by 80% during the same period, according to the data retrieved by Finbold on November 8.

In other words, the native token of Sam Bankman-Fried’s crypto trading platform has lost nearly $2.5 billion from its market cap, bleeding it by 81% in a single day, as per the most recent CoinMarketCapchart.

At the same time, FTT is currently changing hands at the price of $4.72, which signifies a 78.84% decline on the day, as well as a loss of 81.76% across the week, with a cumulative decrease of 80.51% over the previous month.

On top of that, FTT futures trading volume suffered a meltdown too, as noted by the crypto analytics platform Coinalyze:

What happened to FTX?

As a reminder, it earlier emerged that Bankman-Fried’s business empire of officially comprised two large entities – the FTX crypto exchange and his trading firm Alameda Research – the link between which was confirmed in Alameda’s financial data that mainly consists of the FTT token.

In response to this revelation, Binance’s CEO Changpeng Zhao announced the company’s decision “to liquidate any remaining FTT on our books” on November 6, with which it proceeded later on, selling 22,999,999 FTT worth $584,828,174.

Meanwhile, FTX’s CEO took to Twitter on November 7 to state that “a competitor is trying to go after us with false rumors,” adding that:

“FTX is fine. Assets are fine.”

Binance: ‘There is no war’

More recently, Binance co-founder He Yi said that “the Portfolio Management team at Labs decided to sell FTT based on the risk-control metrics we monitored.” Denying the allegations that the two exchanges were at each other’s throats, she added that:

“The point we’d like to stress is that the decision to hold or sell a token depends on one’s own risk appetite and judgment. Our decision to sell FTT is a pure investment-related exit decision, which has nothing to do with “a war,” and we have no intention to engage in drama.”

Elsewhere, the OKX CEO warned that the current developments could have far-reaching consequences:

“If, unfortunately, FTX becomes another LUNA, nobody in the industry can benefit from the accident, including Binance. Both customers and regulators will lose some confidence about the whole industry. I hope CZ can think about stop to sell FTT and make a new deal with SBF.”

It is also worth noting that, amid all the controversy, crypto exchange BitMEX recently announced the upcoming listing of two new FTT perpetual contracts on its network, allowing users to trade FTT via its FTTUSD and FTTUSDT listings, “with up to 50x leverage.”

Binance buys FTX

That said, in a surprising twist, Binance’s CEO announced later on November 8 that his company had decided to fully acquire FTX in order to help them recover from the ongoing liquidity issues.

This gesture should not just help FTX avoid collapse but also prevent a potential far-reaching domino effect across the entire crypto industry that is still licking its wounds after the widely publicized Terra crash.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.