FTT, the native token of FTX, keeps falling as rumors of the crypto exchange’s potential bankruptcy circulate.
FTT falls by 25%.
In three hours on Tuesday, the price of FTT dropped more than 25%, from $21.83 to $15.40, as the native coin of the exchange continued to lose value. Since then, FTT has risen a little too over $17, although it is still down more than 20% in the current trading session. Despite the rise, FTT’s market value has dropped by about $600 million in the past few hours.
The selloff on Tuesday occurs as FTX deals with a bank run on its exchange due to concerns that the platform may not be solvent. The site has recorded a high amount of withdrawals, and some users have expressed frustration with the procedure’s length on social media.
For its part, FTX has been selling off other cryptos on its books in an effort to defend the value of its currency. There are worries that a further drop in the FTT price could lead to a wave of liquidations in the cryptocurrency market and start a new chain reaction that would spread as it did during the TerraUSD/Luna collapse.
FTT is not the only token that is now in the red, in fact. In the past day, Bitcoin and Ether have fallen 4% and 5%, respectively. On Tuesday, the market capitalization as a whole decreased by more than 4%.
The earlier balance sheet breach from Alameda Research at the beginning of November is related to the FTX bank run. Sam Bankman-Fried, the CEO of FTX, owns the quantitative cryptocurrency trading firm, Alameda. The compromised balance sheet revealed how heavily exposed Alameda was to the FTT token. In response to the paper, Alameda claimed that it was not the full financial sheet for the company.
Binance CEO Changpeng Zhao announced that the exchange would unwind its FTT position shortly after the information became public, which had a big impact on the market. On Monday, Bankman-Fried addressed these concerns and said that FTX was operating normally. Given Tuesday’s dramatic price drop, it seems that this guarantee did little to calm the market.
