Why is FTX Token crashing? $600 million outflows FTT market cap in a day
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 FTX token’s price and market capitalization are taking a dramatic hit.
Indeed, the market cap of FTT has dropped from $2.99 billion to $2.36 billion within 24 hours, as the price of FTX’s token declined by over 20% during the same period, according to the data retrieved by Finbold on November 20.
In other words, the native token of Sam Bankman-Fried’s crypto trading platform has lost $630 million from its market cap, bleeding it by 21.07% in a single day, as per the most recent CoinMarketCapchart.
At the same time, FTT is changing hands at the price of $17.33, which signifies a 22.95% decline on the day and a loss of 33.95% across the week, with a cumulative decrease of 28.38% over the previous month.
On top of that, FTT futures trading volume suffered a meltdown too, as noted by the crypto analytics platform Coinalyze:
$FTT trading volume is thermonuclear today. $3.3 billion so far(futures market). pic.twitter.com/RW5nXwvS5I— Coinalyze (@coinalyzetool) November 8, 2022
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.”
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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