Why Crypto Prices Are Still Crashing and Will The Bleeding Stop Soon?
Crypto prices continue to crash after Binance pulled the plug on its proposed acquisition of FTX and the troubled exchange said it was facing bankruptcy unless it could raise $4 billion.
Meanwhile, the bitcoin price fell to as low as $15,597, but has since recovered 3.5% to trade at $16,350.
If today’s US CPI inflation figures come in soft then expect a bounce in crypto prices, which means $15k could have been the bottom for bitcoin.
If the reverse is the case and inflation is still heating up, then buying pressure will likely increase drastically.
But stymie any prospect of an end to the turmoil soon is the mounting problems at Sam Bankman-Fried’s FTX exchange.
The Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are are now investigating FTX and associated trading firm Alameda Research.
FTX Token (FTT) has now lost 88% of its value since the run on its deposits began earlier this week. Its exchange coin is currently trading at $2.63.
SBF on call to investors makes desperate plea for help
According to Bloomberg, on a call to investors prior to Binance walking away from the buyout deal, he reported that the company faced a shortfall of $8 billion and needed $4 billion to remain solvent going concern.
Explaining that he had “f—-ed up”, SBF pleaded for financial support from investors, saying that he would be “incredibly, unbelievably grateful”.
Investors in FTX include the great and the good of the U.S. investment banking and VC world, with names such as BlackRock, SoftBank, Sequoia and Tiger Global Management among its backers – they all face seeing their investments wiped out..
Apparently, SBF was insisting up to an hour before Binance nixed the deal that it was still on, as he sort to persuade investors to pony up cash.
But it was not to be, as CZ made clear on Twitter.
Sad day. Tried, but 😭— CZ 🔶 Binance (@cz_binance) November 9, 2022
Holders of certain assets on FTX might still find salvation. For example Justin Sun, the founder and CEO of Tron, said the company was standing behind all holders of TRON tokens (TRX, BTT, JST, SUN, HT) on FTX:
Further to my announcement to stand behind all Tron token (#TRX, #BTT, #JST, #SUN, #HT) holders on #FTX, we are putting together a solution together with #FTX to initiate a pathway forward. @FTX_Official— H.E. Justin Sun 孙宇晨 (@justinsuntron) November 10, 2022
As crypto prices crash, which firm will go bust next? Margin calls will be brutal
According to JPMorgan strategists the latest set back for crypto makers could take weeks to work through the system as deleveraging takes place as a result of cascading margin calls.
With one of the supposed white knights of crypto – FTX – laid low, and even Binance deciding to turn the other way on buying parts of FTX, the chances of bailouts rescuing companies that have overextended on their borrowing are vanishing, as the JPMorgan strategists point out:
“What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking”
Based on production costs, the JPMorgan team think bitcoin could revisit the $13,000 levels.
Crypto.com the next domino to fall in crypto prices bloodbath?
With crypto prices in free-fall, at this point it is hard to say where the deleveraging could end and which major crypto entity could be the next domino to fall.
For example, Crypto.com, that lavished spending on marketing such as the renaming of the Staples Center to the crypto.com centre, has announced that it is suspending withdrawals of the Solana token.
FTX and Alameda Research are some of the largest holders of the coin. The price of Solana has crashed 55% in recent days and is trading at $14.06
At uncertain like the present one place of relative calm is new coins that are yet to list on exchanges and offer the possibility of market-beating returns when they do.
To forestall being visited by the same storm that has blown way FTX, Crypto.com will be publishing audited proof of reserves:
Two coins that could inject some alpha into your crypto portfolio
One coin that might fit the bill for outsized returns while other crypto prices fall are Dash 2 Trade, which is a trading analytics and signals platform with an access token in presale called D2T.
The ‘Bloomberg Terminal for traders’ is built by traders for traders and is backed by the team at Learn 2 Trade, which already has a community of 70,000 traders.
D2T has already secured a listing on the LBank exchange after the presale ends. You need to buy early to get the discounted prices, as there is a price ladder with 10 stages. D2T is currently priced at $0.0513.