Cryptocurrency market 'in red zone' after Binance walks away from FTX bailout: reaction
Binance said that after carrying out due diligence it would not pursue the takeover deal, knocking confidence in the wider crypto industry. Binance pointed to reports of “mishandled customer funds and alleged US agency investigations” as it pulled out of the potential deal. FTX - an exchange where people buy and sell various crypto currencies - had been struggling with a surge in withdrawals that led to a “liquidity crunch”.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “Watching what used to be the world’s fourth biggest crypto exchange go under the water triggered panic across the sector, getting investors to question whether FTX is an isolated case, or this is just the tip of the iceberg, and if and how many of the cryptocurrency exchanges may have similar insolvency problems, that are only waiting to get revealed.
“No one can tell you exactly what will happen from here, but the downside risks prevail, with the risk of FTX not being saved by investors.”
Nigel Green, chief executive of deVere Group, the financial advisory and asset management firm, noted: “The wider crypto ecosystem has been rocked by the FTX-Binance turmoil. The market is now in the red zone. The global crypto market cap has fallen back to around $906 billion, down 11 per cent over the past 24 hours. Cryptocurrencies must come into the regulatory tent and be held to the same standards as the rest of the financial system.”
Temple Melville, chief executive of the Scotcoin Project Community Interest Company (CIC), said: “Markets have obviously dropped significantly on the back of the news about FTX, but that was to be expected. You wouldn’t rule out further bad news to come. Subsequently, I expect there to be further falls in the value of Bitcoin and Ethereum, as there will be massive losses from this latest debacle. However, once these short-term jolts to the system are out of the way, I would expect to see a steady move upwards over the period up to the halving in 2024, when the reward for mining Bitcoin is cut in half once more, with an effective increase in deflation for it.”
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