The two past days have been a rollercoaster for the cryptocurrency market. Speculation, scandals, and dumps dominated the crypto sector. So many things happened today that most people affiliated with this market are having it hard to catch up. From the FTX balance sheet leak to Binance dumping the FTX token, the market has given us two days to be remembered. All of these things led to one thing, a huge crash. While we are used to seeing a volatile crypto market, most crypto enthusiasts believed that Bitcoin has already seen the bottom of this bear cycle. Well, we were wrong. Yesterday and the day before, $200 billion were taken out of the crypto market.
Let us take a look at some events that occurred earlier this year and the year before. One year ago, on the 9th of November 2021, Bitcoin hit its current all-time high of $68,780. Ever since then, Bitcoin has been losing value. Because the crypto market moves in cycles, this Bitcoin dump was something to expect. Nevertheless, some events have increased the overall FUD in the crypto sector. The main one, of course, is the bank run of Terra. As most of you may know, Terra Luna, one of the biggest and most promising cryptocurrency projects of all time, crashed to $0 in just two days. This caused extreme panic in the market and has a direct effect on the overall performance of the market.
Why is the Crypto Market Down Today?
Well, something similar to the Terra incident was about to happen just two days ago, but this time, the protagonist of the story was FTX. For your information, FTX was one of the biggest cryptocurrency exchanges in the market. Earlier this month, somebody leaked the balance sheet of the sister company of FTX, Alameda Research. This company holds most of its wealth in the FTX token (FTT), the native token of the FTX ecosystem. The main problem with such a thing was that this token is illiquid. Furthermore, if the company encountered a problem that needed a spontaneous solution, it would have to liquidate its FTT position, causing a price dump on FTT in return.
One of the biggest partners of FTX and simultaneously the biggest cryptocurrency exchange, Binance, found out about this almost immediately. Just then, CZ Binance made a tweet stating that Binance will sell its FTT tokens in a span of six months. While CZ tried to minimize the market impact by slowly selling Binance’s FTT holdings, the market panicked. This caused FTT to lose 80% of its value in just two days, going from a price of $22.60 to its current price of $4.80. As per the current state of the FTX exchange, there is still a lot of speculation going around the market. On one hand, we have claims that FTX went bankrupt. On the other hand, there are claims that Binance has acquired the FTX exchange. Nevertheless, none of the parties confirmed anything other than a strategic transaction and agreement between the two.
Conclusion: Why is Bitcoin Down Today?
When there is fear in the market, the first cryptocurrency to experience it is Bitcoin. This is because Bitcoin dominates the market by 39.1%. Being the first and biggest cryptocurrency in the market sure comes with some drawbacks. Whatever happens in the market is reflected through Bitcoin, as it always was. This does not mean that such events don’t affect altcoins. Similar to Bitcoin, most altcoins have lost +20% of their value in the past two days. On the 7th of November, Bitcoin had a trading value of $21,600, while today, this cryptocurrency is trading at $17,800 per piece.