Cryptocurrencies Fall After FTX-Binance Deal Scares Investors

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Cryptocurrencies had a second day of sharp declines on Wednesday, with investors wary of the stability of the sector and the financial health of the FTX exchange, despite plans for a rescue deal from bigger rival Binance.

Binance signed a non-binding agreement on Tuesday to buy the non-U.S. unit of FTX to help cover a “liquidity crisis” at the rival.

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Bitcoin was down about 5.7% on the day to $17,508 at 11:41 am ET, after a 10% drop on Tuesday, its worst day since August. Ether fell to the lowest level since July.

After rapid growth in 2020 and 2021, bitcoin is down around 62% in 2022.

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Binance, the cryptocurrency used on the eponymous platform, was also not spared. The world’s fourth-largest cryptocurrency, with a market cap close to $50 billion, was at $299, down 8.8%.

FTX Chief Executive Sam Bankman-Fried said his teams are working to clean up the cash backlog, but uncertainty about the status of the bailout and the depth of the issues had traders nervous.

“Cryptocurrency players are reacting faster to news and rumours, which in turn creates a liquidity crisis faster than one would see in traditional finance,” said Fabian Astic, head of DeFi and digital assets at Moody’s Investors. Service.

It is unclear how regulators will consider a deal between the two cryptocurrency exchanges.

Source: CNN Brasil

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