The collapse of cryptocurrency exchange FTX on November 8 has created another major downturn in the already bleak cryptocurrency industry.

Bitcoin has plunged 11.6%, while Ethereum has witnessed a 15% crash, according to data from CoinGecko.

While the native token FTX FTT is down 71.6%, CoinGecko showed, and the firm’s net holdings of crypto assets have plummeted 83% in the past two days.

Charts from Coinmarketcap and Yahoo Finance have shown that the total market capitalization for all crypto assets has fallen by more than 11%, from $1.03 trillion to $915 billion. The catalyst for the crypto market crash was Binance’s sudden move to acquire FTX after months of tensions between the two crypto exchanges.

The first investor to fund FTX was Binance, the world’s largest cryptocurrency exchange. Binance CEO Changpeng Zhao (CZ) tweeted on Tuesday: “This afternoon, FTX requested our help. There is a significant liquidity crisis.”

“To protect users, we signed a non-binding agreement [letter of intent], with the intention of fully acquiring http://FTX.com and helping to cover the liquidity crisis. We will be doing a full [due diligence] in the next few days,” he added.

FTX CEO Sam Bankman-Fried had, until recently, been buying cryptocurrency companies that were struggling due to a credit crisis caused by the sudden collapse of cryptocurrencies Luna and UST or TerraUSD.

However, that has left a liquidity crunch on FTX, indicating a potential to sell crypto to attract finance.

Analysts have stated that if the merger between the two crypto exchanges goes ahead, crypto firms could face even tougher business competition at a time when trading volumes have dropped sharply.

Data from cryptocurrency indexing platform Nomics has shown that total cryptocurrency trading volumes worldwide in 2022 have fallen 21% to $86 trillion across all exchanges. Binance accounted for 21.7% of total cryptocurrency trading volume globally, while FTX had a 3.96% share during that period.

Other rival crypto exchanges have also faced the brunt of the fight between Binance and FTX. Coinbase Global saw its shares close 11% lower on Tuesday, from $54.50 to $50.83.

While Robinhood, in which Bankman-Fried has a 7.6% stake, plunged 19% on Tuesday, its steepest drop since August 2021.

The merger would also eliminate Binance’s main competitor and could give Binance a presence in the US that it currently does not have.

However, the merger may take a while to finalize as Bankman-Fried has been testifying in Congress, while Binance has reportedly faced investigations in the US by the Securities and Exchange Commission. and Securities in the US, as well as in the UK by the country’s Financial Conduct Authority.

Prior to Binance’s move to acquire FTX, CZ sold around $529 mln worth of FTT on Nov 6 in response to “recent revelations that came to light”. He did not provide clarification on the settlement.

Following the event, FTX witnessed an 83% drop in net crypto asset holdings, coupled with a drop in the company’s stablecoin stash by a total of 93% in the past two weeks and withdrawals. related almost to zero.

According to a recent report from Reuters, FTX saw around $6 billion in withdrawals in the 72 hours leading up to Tuesday morning. As a result, SBF has he lost an estimated $14.6 billion dollars, nearly 94% of his total wealth, according to the Bloomberg Billionaires Index.

“On an average day, we have tens of millions of dollars of net inflows/outflows. Things were mostly average until this weekend a few days ago,” Bankman-Fried wrote in a message to staff sent Tuesday morning. morning.

Investors have also suffered due to the fall of FTX. Venture capital firm Sequoia had provided $420 million in a funding round that brought the crypto exchange’s valuation to $25 billion in October 2021.

FTX’s valuation increased further to $32 billion in January 2022 following a $400 million investment injected by a consortium with Paradigm.

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