By Ambar Warrick
Investing.com-- Bitcoin prices fell over 10% on Wednesday, with the broader crypto market in freefall after a potential bankruptcy in world no.2 exchange FTX soured sentiment towards the space, with a bailout offer by Binance doing little to soothe losses.
Bitcoin, the world’s largest cryptocurrency traded down 10.2% at $18,488.5 by 19:17 ET (00:17 GMT), after briefly sinking to $17,260- its weakest level in 2022. World no.2 cryptocurrency Ethereum fell 15.1% to $1,330.26, also briefly touching a one-month low.
The broader crypto market was also sold off heavily, with altcoins including Dogecoin, Ripple and Cardano logging double-digit losses.
FTT, FTX’s native token, plummeted about 75% this week to record lows, as the crypto exchange faced a bank run amid increasing doubts over its finances.
Binance CEO Changpeng Zhao said on Twitter that the world’s largest crypto exchange signed a non-binding deal to buy FTX operations outside the U.S, only a few hours after FTX suspended client withdrawals.
The move was triggered by Binance, which is one of FTX’s largest backers, threatening to withdraw its funding from the exchange after allegations arose that FTX inflated the value of its native token to appear more valuable.
This triggered a flurry of withdrawals by smaller investors, fueling a liquidity crunch for the exchange.
Binance’s takeover entails that the exchange will delay the withdrawal of its funding from FTX, and will likely see all of FTX’s non-U.S. operations merged into Binance.
BNB, Binance’s native token, trimmed some losses after the takeover was announced, and traded down 1.7% at $331.10.
FTX’s apparent bankruptcy is the most prolific casualty of the crypto crash this year, as growing pressure from rising interest rates and a series of high-profile hacks severely dented investor sentiment. The exchange follows the likes of Celsius and Voyager Digital in suspending withdrawals due to a severe liquidity crunch caused by the crypto crash this year.
Crypto prices crashed sharply from record highs hit a year ago, leaving the total market valued well below $1 trillion- a third of the near $3 trillion valuation seen during its peak.
Bitcoin- the poster child of the crypto space- is now trading near a two-year low, with further losses threatening to wipe out nearly all gains made during the past two years.