Bitcoin sinks below $20K as FTX Token at heart of FTX-Alameda drama tumbles
Vertigo3d
Bitcoin (BTC-USD) came under selling pressure in early Tuesday trading as FTX Token (FTT-USD), the digital coin issued by Sam Bankman-Fried's cryptocurrency exchange FTX, dropped to its lowest level since February 2021 amid growing concerns about the finances of Alameda Research, SBF's hedge fund.
Over the past 24 hours, bitcoin (BTC-USD) slid 5.1% to $19.66K at 8:51 a.m. ET after reaching as low as $19.41K earlier in the session. BTC was not the only token feeling the knock-on effects from the FTX-Alameda drama. In fact, most of the major cryptos by market cap traded in negative territory. Ethereum (ETH-USD) retreated 6.6% to $1.47K, ripple (XRP-USD), -7%, dogecoin (DOGE-USD), -13.6%, cardano (ADA-USD), -4.7%, and solana (SOL-USD), -10.6%.
Sam Bankman-Fried vs. Changpeng Zhao:
Recall when Binance CEO Changpeng Zhao said over the weekend that his crypto exchange will offload the rest of its sizable holdings of FTX Token (FTT-USD) "in a way that minimizes market impact." Since his announcement, the price of FTT, the 29th largest crypto by market cap, collapsed 25.8%, shedding roughly $1B in market value, according to CoinMarketCap data.
His remarks came shortly after CoinDesk's story parsed Alameda's balance sheet that had market participants on edge. The article highlighted that the trading firm had over $5.8B of FTX Token (FTT-USD) on its books, accounting for the largest portion of its $14.6B assets. The troubling part is that FTT's circulating supply is just around $4.36B.
That means "the price that the assets are marked on Alameda’s balance sheet look less like mark-to-market and more like mark-to-myth as it would be impossible to liquidate their FTT at anything like the price they are marked on Alameda’s books," Ryan Shea, crypto economist at Trakx, wrote in a recent report.
All in all, "if the latest episode serves to speed up crypto regulation then it could be just the catalyst that brings crypto to a wider audience and this is a good thing," he concluded.
Crypto and crypto-related stocks:
The bearish price action in cryptos pulled down the prices of crypto-related equities, including Coinbase Global (NASDAQ:COIN), -2.3%, MicroStrategy (NASDAQ:MSTR), -4.7%, Marathon Digital (NASDAQ:MARA), -5.1%, and Riot Blockchain (NASDAQ:RIOT), -6.3%.
And while all three major stock index futures pointed to a higher open, crypto-related stocks still changed hands in a sea of red, underscoring their deep ties to digital tokens instead of the broader stock market.
Elsewhere in the cryptosphere, Justice Department seizes billions in crypto from Silk Road scammer.