• The crypto market in turmoil
• Ups and downs with Bitcoin & Co.
• Reasons for market turmoil
After Bitcoin showed relative stability around the US$20,000 mark for the past few weeks, there has been tremendous turbulence in the market recently. The crypto veteran fell by US$16,000, and altcoins like Ethereum also lost a lot of their value.
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FTX sends a shock to crypto investors
Problems with the FTX crypto exchange are to blame for the recent turmoil. After the head of competitor exchange Binance, Changpeng Zhao, announced in a series of tweets that his company would sell its holdings in the FTX-owned token due to “disclosures”, he and FTX boss Sam Bankman Fried exchanged blows on Twitter.
Although Bankman-Fried tried to dispel doubts about his company’s liquidity, FTX continued to come under pressure in the days that followed as investors withdrew huge sums of money from the crypto exchange.
Ironically, Binance finally stepped in as a rescuer: “This afternoon, FTX asked for our help. There is a major liquidity bottleneck,” Binance boss Changpeng Zhao tweeted on Tuesday. The takeover was later confirmed in another tweet:
1) Hi everyone: I have a few announcements for you.
The circle is complete, and the first and last investors of https://t.co/DWPOotRHcX are the same: we have reached an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending JJ etc).
– SBF (@SBF_FTX) November 8, 2022
Cryptocurrencies are collapsing across the board – and rebounding
The planned takeover caused a huge sell-off in cryptocurrencies. Concerns about the stability of the still relatively young crypto sector have arisen again. Not only have major digital currencies lost ground, but the FTX token has also come under massive pressure. In particular, a possible risk of contagion caused investors to flee cryptocurrencies.
Just a day later, cryptocurrencies have partially recovered from their massive losses. This was due to rumors that Binance might abandon its takeover plans. In fact, the Chinese then announced their withdrawal from the purchase agreement and justified it with the latest findings: the difficulties of the trading platform would exceed the company’s ability to help, according to a press release from Binance.
However, the recovery trends meanwhile are on shaky ground, apparently investors remain critical of the stability of the crypto market. After all, the market already had very bad news to digest in 2022: the collapse of crypto fund Three Arrows Capital in the wake of the Terra/LUNA crisis and the subsequent bankruptcies of Voyager Digital and Celsius Network are still in the bones of the market. market. attendees. At that time, FTX had stepped in as a savior for some of the companies involved, now Sam Bankman-Fried’s business itself has faced a massive downfall.
Struggling crypto exchange FTX announced on Friday afternoon that it was officially insolvent. On Friday, tech entrepreneur Sam Bankman-Fried’s group filed for bankruptcy protection in the United States, according to its own statements. Bankman-Fried also announced his resignation as CEO. The previous evening, the Bahamian securities regulator announced that it had frozen certain assets of FTX and had asked an insolvency administrator to handle the transaction. The Group’s international operations are based in the Bahamas. According to the group, the US proceedings under Chapter 11 of the Insolvency Act affect, among others, the US crypto exchange FTX US and 130 other companies that together form the FTX Group.
As FTX’s U.S. subsidiary legal counsel Ryne Miller announced on Twitter on Saturday, FTX is clearly struggling with mysterious money outflows after filing for bankruptcy. There were “unauthorized transactions,” Miller said. Therefore, all digital assets are stored offline as a precaution. Miller did not disclose the volume of the transactions involved or the alleged perpetrators. According to the German news agency, British analytics firm Elliptic suspected that crypto assets worth $473 million were stolen from FTX on Friday evening. They would be exchanged for cryptocurrency ether on decentralized exchanges – a procedure often used by hackers to prevent their loot from being seized.
Bahamian police have since opened an investigation. In light of FTX’s global collapse, a team of financial investigators are working closely with the island nation’s securities regulator to determine if there has been any foul play, police said. sunday. The Bahamas is home to FTX’s international operations, as well as retired boss Sam Bankman-Fried. The securities regulator previously said the company was suspected of embezzling client funds, among other things.
A big name doesn’t protect against bankruptcy, crypto investors have learned this year. They accordingly react sensitively to possible liquidity problems, which leads to high volatility in the crypto market.
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