FTT Tanks 28% as FTX Exchange Struggles to Process Withdrawals
FTX’s FTT token has broken critical support at $21.
The downward move was spurred by a loss of confidence in the FTX exchange.
FTX users have been withdrawing funds from the exchange en masse due to fears that the could be insolvent.
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FTX’s FTT exchange token has fallen to its lowest level since early 2021.
FTT Token Breaks Support
FTX is experiencing a bank run, and its FTT exchange token is suffering.
The leading crypto exchange recorded record outflows yesterday as insolvency fears intensified. Rumors that FTX could be facing financial difficulties have weighed heavily on its FTT token, causing it to drop below the $21 support held since early 2021. Recent reports also suggest that FTX is struggling to process crypto withdrawals as on-chain data revealed none had been processed for a two-hour period Tuesday afternoon.
Over the past 24 hours, FTT has fallen over 28% per the FTX exchange’s own spot market data. It reached a multi-year low of $15.40 early Tuesday morning before posting a slight recovery. At its current value of $15.94, FTT is down over 81% from its bull market high of $84.18, achieved on September 9, 2021.
The FTT selloff is largely due to a sharp loss of confidence in the FTX exchange. Since November 5, FTX users appear to have withdrawn huge sums from the exchange due to fear that it could be facing insolvency. Per Santiment data, FTX wallet balances of ETH have fallen over 90% as trust in exchange wavered. Stablecoin balances have also registered a steep drop, with CryptoQuant data revealing the exchange’s reserves have reached a yearly low of $51 million, down 93% over the past two weeks.
Last week, a leaked balance sheet from Alameda Research raised concerns about the FTX-affiliated trading firm’s financial situation. The document revealed that Alameda held more than $14.6 billion in assets against $7.4 billion in liabilities. However, as most of these assets consisted of highly-illiquid tokens such as FTT, SRM, MAPS, and OXY, it raised doubts as to whether Alameda could pay off its debts.
As FTX CEO Sam Bankman-Fried founded both Alameda Research and the FTX exchange, onlookers have long speculated that the pair were intimately connected. Bankman-Fried has maintained that the two companies are separate entities, but this doesn’t seem to have convinced many FTX users. The current exodus from FTX stems from fears that Alameda had been using FTX’s liquidity in its trading strategies. Now that the trading firm appears to have run out of cash, customers are worried that FTX may not hold enough funds in reserve to allow everyone to withdraw their funds.
Disclosure: At the time of writing this piece, the author owned FTT, ETH, and several other crypto assets.
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