FTX Native Token FTT Plunges Following Takeover News

Traders question what the utility of the FTT token will be with Binance in charge

article-image

Source: Shutterstock

share

The FTX.com international exchange has long offered traders a variety of perks for holding and staking FTT, the exchange’s native token. Following the news of some sort of buyout deal tentatively reached between FTX and Binance, the future of FTT is in doubt.

For trades on FTX, holding various amounts of FTT in an account offered up to a 60% fee discount, among other benefits. 

But Binance has its own BNB token, which likewise provides diminished fees — leading to industry chatter that an FTT token could well become redundant.

After an initial bounce, FTT has fallen sharply Tuesday, down over 70% on the day through 3 pm ET.

FTT USD Tether
Source: TradingView

Spot trading of FTT — which is ostensibly off limits to US traders — is only available on a handful of crypto exchanges, principally FTX itself and Binance.

In a recent market-rattling move, Binance’s CEO Changpeng ‘CZ’ Zhao said his firm would divest from the FTT token, before changing course entirely and making public his preliminary intention to acquire the firm. The deal, which is contingent on due diligence and finalizing terms, does not include FTX’s US arm. 

On Nov. 5, FTX transferred 23 million FTT tokens, then worth $584 million, from Binance cold wallets to the exchange. CZ confirmed on Monday that the transfer was “part of” the Binance investment. That represented a significant fraction of the total volume of FTT trading, considering sellers ran rampant and liquidity hit a wall. 

A liquidity crunch of epic proportions

The relative illiquidity of the token meant that Binance could not sell en masse on the open market. That reality, no doubt, prompted the now-infamous tweeted offer to snap up of all Binance’s stake at $22 per FTT from Alameda CEO Caroline Ellison.

Loading Tweet..

The move placed a temporary floor under the FTT price. But it didn’t last. 

As of early Tuesday — around 2:30 am ET — FTT broke down and never recovered. By 3:00 pm in New York, the token was in the midst of a bounce from a low of roughly $2.60 and trading for between $4 and $5 in a very volatile market environment.

The FTX exchange suffered from a crisis of confidence, according to Peter Eberle, chief investment officer and president of the digital-asset focused investment manager Castle Funds.

“FTX had massive outflows from their exchange as everyone feared losing online assets,” he told Blockworks via email. “This means that market makers also removed assets and that removed liquidity. Many traders seem to have backed away or reduced their trading size.”

When fear takes hold, a lack of liquidity in already sparsely traded markets can be particularly deadly.

A spokesperson for FTX was not available for comment.

Ornella Hernandez contributed reporting.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

It turns out that bitcoin never actually hit an all-time high in March. Thanks a lot, inflation.

article-image

Spire, Citrea and Nillion also announced raises this week

article-image

The latest recipient of an SEC Wells notice is a Web3 gaming company

article-image

Thursday’s selloff was led by tech stocks, triggered by disappointing outlooks from giants Meta and Microsoft

article-image

Historically, positive returns have been a bit more of a toss-up during the year’s 11th month

article-image

A new spot SOL ETF filing with the SEC comes a few months after VanEck kicked off the process with a filing of its own