Crypto markets tumbled in unison as investors raised concerns about the industry’s stability after Binance’s decision to sell $530 million of FTT, the native token of Sam Bankman-Fried’s FTX.
(Bloomberg) — Crypto markets tumbled in unison as investors raised concerns about the industry’s stability after Binance’s decision to sell $530 million of FTT, the native token of Sam Bankman-Fried’s FTX.
Bitcoin sank as much as 6.4% to $19,370, the lowest level in two weeks. The losses were severe in smaller altcoins and tokens with ties to FTX. FTT plunged 18% and Solana, which is backed by FTX and Alameda, plunged nearly 20% on Tuesday.
The selloff extends a week of turmoil in crypto markets after Changpeng Zhao, the chief executive officer of Binance, announced the FTT sales in a Twitter post on Monday. In an article last week, news site CoinDesk said a large portion of the balance sheet of Bankman-Fried’s trading house Alameda Research was comprised of the FTT Token.
Bankman-Fried sought to reassure investors on Monday, noting that “unfounded rumors” had been circulating and that the exchange kept audited financials.
“Concerns around FTX and Alameda seem to be causing nervousness in the markets, which is impacting all of crypto currently,” said Vijay Ayyar, vice president of corporate development and international at crypto platform Luno.
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Cryptocurrency prices have also followed a wider slump in risk assets as central banks hike interest rates to combat soaring inflation. Ether slumped 5.6% to $1,486 on Tuesday. The MVIS CryptoCompare Digital Assets 100 Index fell as much as 6.6%.
Virtual currencies have struggled this year following a series of major collapses and bankruptcies of firms including hedge fund Three Arrows Capital and lender Celsius which have heightened investor jitters.
Given the declines, there are “potential market players who smell blood and are adding to the downward price pressure,” said Cici Lu, chief executive officer of Venn Link Partners Pte.
–With assistance from Emily Nicolle.
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