The cryptocurrency markets are in turmoil once again due to centralized infrastructure mishaps. Binance will acquire the FTX exchange in one of the industry’s most significant consolidations of power in recent years. However, that also makes people wonder if there is any reason to hold $FTT, as the token will likely become defunct.
Binance May Scoop Up FTX
Many people were surprised to learn that FTX is in dire financial straits. That shouldn’t be a big shock, though, as there have been questions regarding the exchange and its operation. Moreover, the “backlog for withdrawals” was another red flag. The company has confirmed a “liquidity crunch,” although many aspects remain unclear. It does not appear that any money has been stolen from users, which is a good thing.
There is no such thing as being “too big to fail.” It applies as much to central banks as it does to centralized exchanges. Any entity taking control of your funds needs to be avoided unless necessary. Using an exchange for buying and selling crypto is fine. Using them to trade is acceptable, but you should withdraw funds quickly afterward. These platforms are not wallet solutions, as they control your money, always.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ
Binance (@cz_binance) November 8, 2022
Binance (@cz_binance) Regardless, FTX users are now in a rough position. Those who still have funds on the platform may have to endure delays in getting it out. Thankfully, it seems everyone will be able to get their liquidity with the help of Binance. Behind the scenes, SBF and CZ agreed on letting Binance “acquire” FTX, although the deal is not official yet. Binance can back out of the deal anytime, which may leave FTX users stranded.
One should also question whether this is a good development overall. Competition among centralized exchanges is needed, yet one of the biggest platforms has failed. Moreover, if things proceed as planned, the biggest exchange will acquire one of its core competitors at a discounted rate. A very curious development that will consolidate power even further. Moreover, it remains to be seen what will happen to the FTX platform and whether it has any future.
FTT Is Getting Slaughtered
One thing is sure: no one wants to hold on to their FTT tokens any longer than necessary. So the asset has been dumped into the ground since the FTX news. Logical, as there is no reason for anyone to hold a token tied to an exchange with a “liquidity crunch.” Nor is there any reason to use FTX other than to get money out, as there is zero trust in the platform. That explains why FTT is down by over 76% in the past 24 hours and will likely continue to drop further.
Interestingly, there is still nearly 400% more bullish sentiment on FTT in the past 24 hours. That is a more significant increase than the bearish sentiment, which rose by over 248%. FTT is also up by over 36% versus Bitcoin, which fell to the low $17,000 range. Some may argue there is no “bad press” in crypto, as $FTT has more social mentions than ever before.
Assuming Binance acquires FTX – which is not a done deal – there will be no reason to own FTT. It seems unlikely that FTX will remain an active brand, although FTX.us is a separate entity. Existing token holders will either see the asset’s value drop to 0 or may receive a “conversion” to BNB. That will not be a 1:1 conversion in tokens but rather in US Dollars. At this rate, one would need to own 80 FTT or more to get 1 BNB. Not a favorable rate by any means.
The post FTT Goes Below $4 Amid FTX Dumpster Fire appeared first on CryptoMode.
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