SBF empire falls; BTC tests June lows

Crypto markets seemed on the verge of careening off the rails with the near collapse yesterday of one of its dominant players. The news that liquidity-crunch-ravaged FTX was being sold on bended knee to rival Binance put Bitcoin on sinkhole alert. By Tuesday evening, BTC's $17,600 level – the June low – looked as if it might hold. The Biggest Poppi of crypto did momentarily own a $16K handle as the Beaver blood moon was setting. However, as of Wednesday at 7:50 a.m. (EST), BTC bumped to $17,800, greening nearly 1% in sixty minutes preceding 8 o'clock in the morning as the U.S. East Coast met news of nationwide midterm election results that still were only partially clear, leaving future control of Congress in flux.

Binance on Tuesday signed a nonbinding agreement to acquire FTX's non-U.S. operation, punctuating the debacle that was the stunning cliff dive of Sam Bankman-Fried’s crypto empire.

FTX was the second-largest exchange in the world. Alameda Research, FTX’s supposedly walled-off trading arm, was also a dominant force and one of the largest market makers in the digital money sector. The sister firms’ intestinal fortitude last week came under heavy fire as appearing to be dangerously intertwined, after CoinDesk reported on Alameda's books, which, apparently, turned out to be sketchily wallpapered with FTX's native asset, FTT. Once among the industry’s largest coins in terms of market capitalization, FTT hit a record high of $84 about one year ago. It entered the weekend at about $25.

Skepticism about FTX/Alameda solvency spread like wildfire after Binance CEO Changpeng “CZ” Zhao declared on Sunday that he was dumping. Despite tweeted assurances from the baby-faced/bushy-haired crypto kingpin that all was well, customers yanked $6 billion from SBF's once dominant exchange in the 72 hours prior to Tuesday's deal.

As of Wednesday, at 8:20 a.m. (EST), FTT was below $5, having plummeted 75% in the past 24 hours. Just in the past one hour, FTT shed 7%.

FTX and Binance did not disclose the terms of their emergency bailout agreement, although there is logical speculation that CZ probably only needed to hum the guitar intro to “Take It Or Leave It” by The Strokes.

Whether the deal actually will go forward remains up in the air. Crypto just had itself an earthquake and aftershocks are likely coming.

"The extent of declines may depend on just how much contagion, if any, FTX’s sudden collapse will have in the market," Bloomberg said, noting the sheer speed and unnerving ambiguity surrounding the fate of such a massive player tied to so many other major players, a kind of Three Arrows Capital situation, only potentially worse.

In Asia, cryptocurrencies endured a second day of sharp declines. "Investors continued to fret about the stability of the sector," Reuters said.

That Bitcoin fell to lows not seen in two years has frayed nerves but sparked some early chatter about a possible relief rally, Cointelegraph said.

“Way too soon to know how this all resolves, but the fact we are seeing another exchange-driven liquidity crisis at this point in the macro structure is quite something,” TechDev tweeted. “Important weeks ahead.”