News hardware Crypto: two cryptocurrency giants go to war and bring down Bitcoin and the rest of the market
Since around 3 a.m. (French time), the cryptocurrency called FTT has triggered a spectacular drop in its price. At the same time, the rest of the market followed the fall of cryptocurrency, including Bitcoin. Yet 29th in the ranking, why does this crypto impact the entire market today?
FTT the cryptocurrency of the FTX crypto platform
So unknown to the general public before this event, the FTT cryptocurrency has managed to make a name for itself outside the crypto ecosystem, but not for the right reasons…
Launched on May 8, 2019, FTT is the native crypto token of the 3rd largest crypto trading platform, FTX. This token issued by the platform itself makes it possible to accumulate liquidity while offering advantages to users of the crypto platform – a recurring practice for almost all cryptocurrency trading applications.
While the token was around €22 yesterday, it is now hovering around €15 and doesn’t seem to be stopping in its fall. This spectacular drop of more than 30% even manages to shake the pillars of the sector, namely Bitcoin and Ethereum.
Why is FTT dragging all other cryptos down with it?
This critical situation is explained by a rumor of insolvency on the part of the trading company Alameda Research. This asset manager is owned by Sam Bankman Fried, the founder of the FTX platform and its FTT token.
Concretely, according to information published by the crypto media Coindesk, the equity of Alameda Research would be based mainly on the FTT crypto, from the FTX platform. If at first glance the news does not seem so terrible, in reality it is a real problem, especially in the middle of the crypto winter.
Indeed, in the event of a fall in the FTT price (which is not impossible due to the context), the company could very quickly become insolvent. Moreover, its strong proximity to FTX could also cause the loss of the platform, and thus all users would end up on the straw. A not very reassuring signal when you know that FTX is currently the 3rd largest platform in terms of crypto volume.
Despite a flash denial from Alameda and the boss of FTX, the consequences are already being felt in the sector…
Is Binance taking advantage of this to attack the crypto competition (FTX)?
Following his suspicions, Binance, the top ranked crypto exchange, announced the sale of all the FTT tokens it held, amounting to around $2.1 billion. These tokens come from a Binance investment dating back to 2019.
Following the first sale of part of the tokens (20 million FFT, or 530 million dollars), prices immediately fell by 14%. Although Binance said it wanted to sell these tokens over several months to avoid causing a crash, the news alone served to get everyone offloading their FTTs.
Since then, the FTT has continued to fall, dragging the rest of the market into the abyss. Indeed, the intertwined interest is reminiscent of the unfortunate events of Terra Luna. By going from more than €100 to €0 following a “technical problem” with its UST token, the cryptocurrency had created a cataclysm on the crypto market. Last May, all the companies linked to the Terra Luna cryptocurrency had sunk one by one, like Celsius, 3AC capital or even Voyager Digital.
So, a lot of investors fear to relive a similar scenario, but this time with the FTT token.
Others believe that the two platforms have returned to war. Indeed, the two are neck and neck in the ranking of the most used crypto platforms and bear witness to the same ambitions (stable token, takeover of banks, etc.)
Nevertheless, Changpeng Zhao, the boss of Binance wanted to deny:
“Binance always encourages collaboration between industry players. As for any speculation as to whether this is a move against a competitor, it is not. Our industry is in its infancy and every time a project fails publicly, it hurts every user and every platform. »
Binance always encourages collaboration between industry players. Regarding any speculation as to whether this is a move against a competitor, it is not. Our industry is in it’s nascency and every time a project publicly fails it hurts every user and every platform. 3/4
— CZ 🔶 Binance (@cz_binance) November 6, 2022
To which the FTX boss replied:
“A competitor is trying to sue us with false rumors. FTX is fine. Assets are good”
1) A competitor is trying to go after us with false rumors.
FTX is fine. Assets are fine.
— SBF (@SBF_FTX) November 7, 2022
In this sense, the war between the two competitors does not seem like such a good idea for either of them, since with the blow of billions, the two giants could cause yet another crash – bringing Bitcoin and other cryptocurrencies at the lowest.