Despite preparations for a rescue offer from bigger rival Binance, cryptocurrencies experienced a second day of steep falls as investors remained concerned about the viability of the industry and the financial state of major exchange FTX.
To help FTX’s rival exchange deal with a “liquidity constraint,” crypto giant Binance announced a non-binding agreement to purchase the non-US division of the company.
Following a week of rumours concerning FTX’s financial stability, $6 billion in withdrawals occurred in the 72 hours prior to the proposed agreement.
Since FTX and Binance did not publish the details of their deal, the market’s confidence in its viability has been shaken.
Following a 10 percent decline on Tuesday, which was its worst day since mid-August, Bitcoin, the most valuable cryptocurrency by market value, was down 5.5 percent on the day at $17,656. The second-largest cryptocurrency, ether, continued to decline on Wednesday and hit its lowest level since July.
After falling by 72 percent on Tuesday, FTT, the smaller coin connected to FTX, was down another 16 percent today. According to data from CoinGecko, its market cap decreased to just $600 million from about $3 billion at the beginning of the week.
Zhao wrote in a statement to the staff on Twitter that the deal had no “master plan,” that “FTX failing is not helpful for anyone in the business,” and that it was not a victory.
In the letter, which the Financial Times first revealed, he stated that “regulators will investigate exchanges even more.” “Licenses will be more difficult to obtain globally.”
Zhao also advised investors to disregard the pricing and refrain from trading FTT tokens.
