Bitcoin Price Tanks Below $16K As Binance Pulls FTX Deal

A day after its short-lived comeback above $20,000 Tuesday, bitcoin plunged below $16,000 while ether dipped to its lowest point in four months

article-image

Markets in turmoil; Source: Shutterstock

share

Crypto and stocks extended their declines Wednesday as investors kept their eyes peeled for pending midterm election results and updates regarding apparently canceled plans for Binance to purchase FTX.

A day after its short-lived comeback above $20,000 Tuesday, bitcoin plunged below $16,000, trading 14% lower as of 4:45 pm ET. Ether followed and dipped to its lowest price since July, barely hanging on to the $1,100 level Wednesday afternoon. Nearly two months after the Merge, ether turned deflationary Wednesday as the supply decreased thanks to heightened transaction demand and surging gas fees. 

The decline does not come as a surprise to analysts, who said volatility is to be expected given the uncertainty around FTX’s solvency and legal standing, plus concerns that Binance’s rescue, which was initially well-received, may not be coming.

Future of FTX in doubt as Binance gets cold feet

As some predicted, Binance backed away from its earlier pledge, tweeting Wednesday afternoon that it would not pursue the acquisition of FTX.

Loading Tweet..

Stefan Rust, CEO of immersive web tech agency Laguna Labs, said Tuesday he thought it was “highly unlikely” Binance’s acquisition of FTX would ever come to fruition, adding that Binance CEO Changpeng Zhao was simply “trying to stem the blood flow.”

Sam Dibble, a partner at law firm Baker Botts, also had questions about whether the deal would close. He told Blockworks Wednesday — just before Binance said it would no longer pursue the acquisition — that he looked at the company’s move as “an attempt at market confidence building.”

Dibble had said the intended transaction could turn into more of a financing deal.

“Binance could say, ‘Well we were thinking of acquiring the company, but it turns out really what we want are the assets and not the liabilities,’” he said. “These types of changes in structure of a deal happen all the time in [mergers and acquisitions] when you have a non-binding term sheet like this.”

“I imagine transparency surrounding the size of the hole in FTX’s balance sheet, and presumably the liquidations and bankruptcies that may follow, will be maximum blood within crypto,” Matt Fiebach, research analyst at Blockworks, said. 

Stocks join crypto down sharply ahead of Thursday’s CPI print

Outside of the crypto carnage, equities tumbled, too. The S&P 500 and Nasdaq Composite indexes closing 2.1% and 2.5% lower, respectively. Uncertainty about the future of Federal Funds Rates, which Federal Reserve Chairman Jerome Powell hinted could hit 5%, coupled with election results still trickling in after the close, has traders alarmed. Meanwhile, the dollar index (DXY) was up 0.75%, reversing Tuesday’s slide.

“The current situation reflects relative improvement in the outlook as spiking global yields are no longer pressuring stocks,” Tom Essaye, founder of Sevens Report Research said. “But that’s about the only positive we saw over the past month.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg

Research

Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.

article-image

Accredited and non-accredited investors worldwide will be able to purchase the Note starting Dec. 6 on US-regulated trading platform INX

article-image

Bitcoin’s next halving is less than five months away. History says they’re bullish but will this time be different?

article-image

Merger is set to allow the combined business to “flex between our different lines of business,” Hut 8 CEO says

article-image

Agency’s decision to start comment window earlier than expected could be bullish for spot bitcoin ETF approval in January, industry watchers say

article-image

Jump Crypto is the trading firm at the center of Terra-related market manipulation allegations

article-image

Funds tied to Coinbase co-founder Fred Ehrsam have made the most of the COIN rollercoaster