What are some experts saying about the rise and fall of FTX, which at one point was one of the largest and most popular digital currency exchanges in the world?
FTX Has Crashed and Burned
Craig Erlam – senior market analyst at Oanda – recently formed the following opinion about all the drama surrounding the crypto trading platform:
For a long time, bitcoin has aligned itself with broader risk appetite in the markets, but it goes without saying that Tuesday was not one of those days. Cryptocurrencies have been pummeled at the start of the week, with bitcoin down almost 20 percent in two days at one stage amid concerns over FTX and the implications for the FTT token.
The situation surrounding FTX is not only huge, but it’s one that nobody expected considering the firm’s standing in the digital currency space. By some measures, it was the second strongest and largest digital currency exchange anywhere, and many felt that nothing could beat it down. In fact, during this entire crypto winter, FTX has come to the aid of many other companies in trouble, providing millions of dollars in bailout money so they wouldn’t need to file bankruptcy or close their doors.
It appears, however, that that decision is now coming back to bite the company in the rear end, as FTX is now dealing with what it calls a “liquidity crunch.” FTX allegedly does not have the funds it needs to stay afloat, and the company later went to its primary rival Binance for help.
For a while, it looked like the larger company was going to bail out the smaller one, though the deal failed to materialize, and Binance issued the following statement about why it would not be moving forward with the acquisition:
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.
For a long time, FTX was one of those companies that gave crypto investors hope. They saw it as a firm that could survive anything and ensure the survival of others – even when economic turmoil had reached an all-time high. That image, however, is fading fast, and many crypto traders out there are likely feeling that if FTX isn’t safe, then nobody and nothing is.
This Is a Bad Day for Crypto
Edward Moya – another senior market analyst at Oanda – threw his two cents into the mix and offered the following commentary on the situation:
Today is a bad day in crypto. Binance had to step in to save Sam Bankman-Fried’s FTX crypto exchange. [He] has been the white knight during this crypto winter and a liquidity crunch from him has triggered a wave of uneasiness across the cryptoverse.