Crypto Markets Fall Amid Concerns Binance Won’t Buy FTX

Key Insights

• Crypto markets are in free fall as traders worry that Binance will walk away from the deal with FTX. 
• Solana is under huge pressure, and Crypto.com has halted stablecoin withdrawals on Solana blockchain. 
• Bitcoin tested yearly lows below the $17000 level, which may lead to another wave of selling. 

Binance Is Reportedly Shocked By The State Of FTX’s Finances

The crypto market sell-off continues as worries grow about potential contagion from FTX problems.

According to a recent CoinDesk report, Binance is leaning towards walking away from the deal with FTX due to the weakness of FTX’s balance sheet.

Meanwhile, Crypto.com has reportedly suspended withdrawals and deposits of USDC and USDT on Solana blockchain. Solana is down by roughly 40% in the last 24 hours.

It looks that FTX will also have problems with U.S. regulators. A recent Bloomberg report indicated that SEC and CFTC were probing the relationship between FTX.com (which could be bought by Binance) and FTX U.S. (which is not part of the potential deal with Binance).

A flurry of bad news put significant pressure on crypto markets. Bitcoin tested yearly lows below the $17000 level. Ethereum settled below $1200, while XRP moved towards $0.35.

FTX exchange’s token FTT is trading near the $3.50 level. A few days ago, FTT was valued at $25. Meanwhile, Binance’s BNB has also found itself under significant pressure and pulled back towards the $290 level.

Financial Contagion And Forced Liquidations Are The Main Risks For Crypto Markets

Crypto markets are clearly in a panic mode today. FTX is a top-5 exchange by volume, and its problems will be felt by the whole market. If FTX has financial problems and is forced to liquidate holdings, these forced sales will push the market to lower levels and lead to an avalanche of liquidations from trading firms who used leverage to buy crypto.

The recent developments in Bitcoin are perhaps, the biggest risk for crypto markets right now. Bitcoin has been consolidating in a wide range between $18000 and $25000 since June. Market participants had plenty of time to increase their positions in Bitcoin within this trading range.

Now, Bitcoin managed to get below $17000, so everybody who bought Bitcoin in the $18000 – $25000 range is losing money. If Bitcoin manages to settle below $17000, it will find itself under more pressure as some players will certainly get margin calls. Some miners, who hoped that Bitcoin will ultimately move higher, may be forced to sell Bitcoin to support their balance sheets.

All in all, the next few days will be quite eventful for crypto markets.