Key Insights:
- XRP and the broader crypto market tumble as the market reacts to the demise of FTX.
- FTX agrees to sell to Binance to avoid another crypto market catastrophe.
- SEC wins its case against LBRY, which could have a bearing on the SEC v Ripple case.
Crypto Market Sees Largest Single-Day Fall Since June 13
With just over two hours of the Tuesday session remaining (UTC), the crypto market is down $101 billion to $873.7 billion.
It is the largest single-day loss since June 13, when the crypto market slumped by $130.6 billion to $924.0 billion.
The June 13 sell-off came in response to news of DeFi lender Celsius suspending all withdrawals, swaps, and transfers.
This week, leading crypto exchange FTX became the latest victim of the crypto winter. Binance agreed to acquire FTX. Despite the announcement, FTT is down 75.6% to $5.40. FTT had fallen to a low of $2.73 before a partial recovery.
Contagion fears and fears of increased scrutiny over the digital asset space left investors running for cover, with crypto liquidations spiking throughout the Tuesday session.
Late in the Tuesday session, 24-hour crypto liquidations stood at $854 million, up from $137.65 million on Tuesday morning. At the time of writing, liquidated traders stood at 403,858 versus 72,793 on Tuesday morning.
BTC, ETH, SOL, FTT, DOGE, and BNB saw the largest liquidations.
SEC Wins Case Against LBRY in Another Blow for the Crypto Space
On Monday, news hit the wires of the SEC winning its case against LBRY. According to the Court findings,
“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice, the SEC is entitled to judgment.”
The filing went on to say,
“The SEC’s Motion for Summary Judgment is granted, and LBRY’s Motion for Summary Judgment is denied.”
On Monday, LBC tumbled by 41.45% to $0.01216 before briefly returning to $0.01727 on Tuesday.
Notably, the outcome of the SEC v LBRY case could have a material bearing on the SEC v Ripple case and XRP. There was speculation that the SEC requested an extension in the SEC v Ripple to allow for the LBRY ruling.
With 110 minutes of the Tuesday session remaining (UTC), XRP was down 13.65% to $0.4011.
Crypto Market Decouples from the NASDAQ Composite Index
This week’s crypto market news has led to a decoupling from the NASDAQ Composite Index. On Tuesday, the NASDAQ Composite Index rose by 0.49%, following a 0.85% gain on Monday.
Crypto investor sentiment towards the US economy and Fed monetary policy could remain an afterthought for some time.
Regulator response to the latest crypto market event will likely have more market impact.
Coinbase Falls Foul of German Regulators
This week, Coinbase (COIN) was in the news.
On Tuesday, the Federal Financial Supervisory Authority of Germany (BaFin) issued a notice, saying,
“An audit of the annual financial statements revealed organizational deficiencies at the institute. The regularity of the business organization was not given in all audited areas.”
The news coincided with reports of users facing network connection issues attributed to high user demand.
Coinbase Support tweeted on Tuesday,
“We’ve implemented a fix and latency has improved dramatically. Due to the high level of new user sign-ups and transfers to Coinbase today, some customers had trouble signing up / experienced delays signing in.”
NASDAQ-listed Coinbase Global (COIN) ended the day down 10.78% to $50.83.
US Mid-Term Elections May Have More Bearing after FTX Collapse
The US Mid-Term elections could have greater significance for the crypto space following the collapse of FTX. US voters went to the polls on Tuesday, with the Senate and the House of Representatives up for grabs. The crypto market preference tilts in favor of a Republican clean sweep.
However, this week’s crypto market events will likely shroud the outcome of the Mid-Term elections.
