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FTX Collapses, FTT Price Drops by 75%: What Happened?

Alex Grace

Alex Grace

November 9, 2022

4 min read

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FTX, a fourth largest cryptocurrency exchange by trading volume, is on the verge of collapse and will be highly likely acquired by its core rival Binance. Here’s who suffers the most from this takeover - and how we can prevent it from happening again.

FTX might be acquired by Binance: Background summary by GetBlock

Yesterday, on Nov.9, 2022, Changpeng ‘CZ’ Zhao, CEO and founder of world’s largest cryptocurrency exchange Binance (BNB), confirmed that he came to an agreement with FTX’s head Sam-Bankman Fried: Binance is going to acquire FTX.

This deal signals that the conflict between Binance and FTX entered a new stage. In early November, CZ reported that Binance (BNB) was going to sell its entire bag of FTT, a core native asset of FTX.

Then, the price of FTT started plummeting: representatives of Alameda, a trading firm associated with FTX offered to buy all Binance’s FTT for $22 per token, but this offer was rejected. FTT price immediately plunged to $11.

Amidst the rumors about the insolvency of Alameda and FTX, both entities started aggressively selling their Bitcoin and stablecoins holdings. In panic, clients tried to withdraw funds from FTX, but all withdrawals over $1000 in equivalent were halted.

Due to decreasing value of FTX- and Alameda-associated assets, some DeFi protocols met imbalances: Abracadabra’s stablecoin MIM even lost its peg to $1.

Once the deal was inked, crypto markets spiked, but this appeared to be a dead cat’s bounce: in a few hours Bitcoin dropped below $17,500 revisiting its two-year lows.

Who is the worst sufferer of Binance/FTX drama?

Meanwhile, the deal can still be rejected: Binance has already stated that FTX will go through all necessary due diligence procedures prior to the acquisition. Also, antitrust authorities will strictly check the legitimacy of this contract.

At the same time, retail cryptocurrency users are those affected most by this collapse. First, they are victims of centralization: FTX locked their money while Binance might become a monopolist of this nascent market. Not your keys, not your coins, as the proverb goes.

Then, their holdings reduced in value in no time due to the clash of giants: for instance, FTT price is now 95% down compared to ATH. All assets of Solana’s ecosystem lost over 30% overnight as this blockchain is tied to Alameda firm.

Last but not least, even holders of Bitcoin (BTC) and Ethereum (ETH) are under fire: net capitalization of crypto markets shrunk to $870 billion, a level unseen since November, 2020.

That’s why retail crypto users - even those who avoid using centralized exchanges, investing in Alameda-tied products and algorithmic stablecoins - fall victims of another tragedy in crypto.

Here’s how can GetBlock help

Decentralization is an answer!

That’s what we’re all about. Only on-chain applications are transparent, resistant to manipulations and can’t be used in conflicts between Web3 corporations. They dramatically reduce the influence of teams and their ability to move users' funds.

Since 2019, GetBlock is supercharging dApps with reliable APIs to all mainstream blockchains. Currently, we’re offering 50+ networks; both shared and dedicated nodes are available for our clients.

For instance, to start building on Solana (SOL), Web3 entrepreneurs can use our dedicated nodes APIs. Meanwhile, those who are interested in benefiting from another wave of Binance adoption, can experiment with BNB Chain, its shared and dedicated nodes.

Alex Grace

Alex Grace

November 9, 2022

4 min read