The Celsius and Voyager bankruptcy filings have raised questions about what happens to investors’ crypto when a platform goes down.
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Cryptocurrencies were under pressure for a second day on Wednesday as the market digested the fallout from Binance’s planned FTX bailout.
Bitcoin was last down 5% to hit a new bear market low of $17,019.14, according to Coin Metrics. It hit its all-time high of $17,585.25 a year ago on Thursday. Etherfell 10% to $1,152.34.
The Solana Token continued its slide. It was last down 30%, after plunging 26.4% on Tuesday. Alameda Research, the commercial company owned by Sam Bankman-Fried, who also runs FTX, was one of the main and early funders of the Solana project.
“Market factors such as the provision of SOL token liquidity as well as support for Solana ecosystem projects on the FTX exchange have been an important driver of Solana’s success,” Bernstein’s Gautam Chhugani said in a note Wednesday. . “This is an adverse event for the Solana ecosystem in the near term. Additionally, given FTX/Alameda’s balance sheet situation, there could be near-term pressure on its Solana holdings as the situation will resolve.”
The crypto market rose briefly on Tuesday after Bankman-Fried, also known as SPF, announced that Binance would acquire its non-US operations, but fell shortly after.
The SBF empire quickly crumbled after a report last week showed that much of Alameda’s balance sheet was concentrated in FTX Token (FTT), the native token of the FTX trading platform. After some Twitter clashes with SBF, Binance CEO Changpeng Zhao announced that his company was offloading FTT from its books, leading to a run on the popular FTX exchange and a liquidity crunch.
FTT was down 10% on Wednesday, after falling more than 75% the day before.
The bombshell is likely to set the crypto industry back, but to what extent remains to be seen. Analysts anticipate greater regulatory scrutiny of offshore exchanges, where the majority of crypto derivatives trading takes place. It is also unclear to what extent the financial contagion will spread to the rest of the market.
Additionally, Bankman-Fried had recently been hailed as a “white knight” in the industry as he came to the rescue of crypto services firms like BlockFi and Voyager that have barely survived the crypto contagion. of this spring.
For newcomers to the crypto market, he and FTX have become the faces of the industry, securing the naming rights to the Miami Heat basketball team stadium last year, making Tom Brady and Giselle Bündchen the society’s ambassadors and becoming a political Democratic megadonor.
“Given the public nature of FTX CEO Sam Bankman-Fried and the size of FTX, we believe that the events of the week could lead to some loss of consumer confidence in the crypto industry, at the beyond that seen following the 3AC, Celsius, and Voyager events that took place earlier this year,” especially if contagion takes hold and crypto prices continue to fall, analysts said Tuesday. from KBW in a note. “It may take time for customers to regain trust in the industry, at large (and we think regulation could help that).”
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