If you follow the crypto market closely, you probably know that the cryptocurrency news today is extremely disappointing for investors. And recent events have provoked a wave of panic even among holders. On November 8, cryptocurrencies experienced another collapse, and its scale was quite tangible.
If in the evening on November 7 Bitcoin was at $20,800, then the very next morning it collapsed to a low of $19,344. The reason for the collapse was not only the tense moods among the community because of the coming data on inflation, but also the actions of representatives of Alameda. They were forced to sell various coins to save their own positions. Bitcoin mining news is happening in the market, which is even losing its relevance against this background.
The situation with Bitcoin and other cryptocurrencies has gotten really complicated. One of the biggest collapses in 24 hours was experienced by Solana SOL — and there is an explanation for that too. To understand the situation, it is necessary to recall recent events:
- The financial report of the trading and investment company Alameda, close to the Head of Ftx Sam Bankman-Fried, was leaked online. It made it clear that the company holds about 25 percent of its own assets in FTT, the FTX exchange’s native token;
- Alameda Research CEO Caroline Allison clarified that the report is inaccurate, and that the company has at least $10 billion more in assets. And the company has already paid off most of its debts;
- Despite this, Binance CEO Changpen Zhao announced the company’s decision to sell all of the FTT tokens in its possession. The coins amount to hundreds of millions of dollars;
- Caroline Ellison offered to buy back all FTTs for $22, which at the time was about 10 percent below market price;
- The blockchain community questioned whether Alameda had the resources to buy all the FTTs. However, there was no clear evidence of that, except for the fact that FTX reserves in Stablecoin had plummeted to a historic low of $51 million.
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Latest Crypto news: what’s going on with Bitcoin and other cryptocurrencies
FTT is an important asset for both FTX and Alameda. For the former it is a native token, but Alameda keeps a huge part of its assets in FTT. Analysts suggest that given the latter fact, Alameda traders may use FTT as collateral for leveraged cryptocurrency trading.
Well, that creates liquidation risks on various exchanges. In other words, if FTT drops below a certain level, Alameda’s positions can be liquidated. Accordingly, it is crucial for the company to keep the token rate above an unnamed threshold.
Three Arrows Capital, a crypto fund that once managed billions of dollars’ worth of assets, experienced a collapse precisely because its positions were liquidated. That is, the risks here are quite serious.
In this regard, Caroline’s proposal to buy FTT looks logical: the sale of huge token stocks, though gradual, can lead to a noticeable collapse of its rate. Well, this poses a threat to Alameda’s position.
As a result, after Changpen Zhao announced the sale of all FTT stocks by the Binance exchange, the token rate began to fall. Investors decided to reinsure themselves and got rid of the crypto-asset bit by bit, not wanting to go through any possible problems.
In the morning, the token was valued at $22; but within two hours, the asset could not withstand the pressure of sellers, and collapsed to a minimum of $15. This situation is a huge risk for Alameda, which could face liquidation. How should a company, which is dependent on the price of a particular asset, act? Most likely, sell other assets at its disposal and buy the right coin — in this case, FTT.
What Cryptocurrency news to expect soon?
Transfers to exchanges mean selling assets to get liquidity, which is then diverted to buy FTT. Well, Alameda has more than enough SOL at its disposal, so the company has taken to selling Solana cryptocurrency. This explains the serious drawdown of SOL.
The long detachment of UST from the dollar at one time provoked a disaster for the ecosystem of Terra. At that time, representatives of the project also tried to sell their own assets to support the rate of the coin, but were unable to do anything.
Meanwhile, the cryptocurrency industry is in a difficult situation. On the one hand, OTC-transactions could take place and this means that now Alameda shouldn’t be afraid of a possible liquidation of FTT. On the other hand, FTT is still trading very cheap, which in theory creates risks for the company and forces it to get rid of other assets to buy more coins and increase the rate. Well, that collapses the rest of the market and creates liquidation risks for other players.
How all this will end — no one knows. That’s why it’s hard to make accurate cryptocurrency news predictions. However, solving the situation will obviously be accompanied by serious volatility.