Bitcoin price hits 2-week lows as FTX 'bank run' drains BTC reserves
Bitcoin (BTC) and crypto markets fell heavily into Nov. 8 as contagion from the FTX debacle spilled over.
Analysts dismiss FTX insolvency fears
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD falling to $19,351 on Bitstamp — its lowest levels since Oct. 25.
The pair, along with altcoins large and small, had already begun to show weakness as moves by Binance to cancel exposure to FTX’s in-house (FTT) token were confirmed by CEO Changpeng Zhao.
In a Twitter thread later on Nov. 7, Zhao defended the decision, while FTX CEO Sam Bankman-Fried attempted to reassure markets that his trading platform was solvent.
“There were questions about a large ($580m) FTT deposit to Binance, and we were transparent about the fact that we are closing our FTT position,” part of one of Zhao’s tweets read.
Bankman-Fried’s appeal meanwhile appeared to fall on deaf ears. Overnight, FTX saw a surge in withdrawals, with monitoring resources even showing negative BTC balances for the exchange’s wallets.
Data from on-chain analytics platform CryptoQuant put FTX’s BTC balance reduction on Nov. 7 alone at -19,956 BTC.
Its BTC reserves were reportedly just 7.1 BTC at the time of writing, further data showed, with this potentially due to changes in wallet management.
"FTX, the #2 crypto exchange, is experiencing a bank run," Jack Niewold, founder of newsletter Crypto Pragmatist, began an investigative Twitter thread by stating.
"Pushed to the brink by a debt crisis & an announcement from its #1 competitor, ~$1b has bled out from the platform in the last few days."
In another of many reactions to the ongoing turmoil, Dylan LeClair, senior analyst at UTXO Management, argued that while it might not be over financially for FTX, the transparency of its operations was cause for concern.
“I don’t think it’s probable that FTX is insolvent, but I think the Alameda worries are notable, if nothing else,” part of Twitter comments stated.
“I don't think FTX goes down. Might be, but I don't think so,” Michaël van de Poppe, founder and CEO of trading platform Eight, continued.
“Binance simply wants to sell the position due to the reasons discussed, through which a sell-off was initiated. Bit different from $LUNA and Celsius, but has similarities as well.”
Bitcoin gives up $20,000 mark
For Bitcoin, the outlook remained cloudy as cold feet took hold of market sentiment.
BTC/USD recovered just $400 from its lows on the day, making $20,000 once more out of reach.
Further volatility was on the horizon, meanwhile, as the U.S. midterm elections combined with Consumer Price Index (CPI) data due for release on Nov. 10.
“$FTT tanking heavily, through which also Bitcoin and the rest of the markets show some weakness,” Van de Poppe summarized.
For its part, FTT managed to stage a modest comeback on the day after falling to lows of just above $15.
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