FTX Token (FTT) and Solana (SOL) endured a tough trading weekend in which altcoins suffered double-digit losses ranging from 15% to 30%, but the tide turned on the news that Binance could be in the process of acquiring FTX.
On Nov. 8, FTX CEO Sam Bankman-Fried first took to Twitter to announce a liquidity-sharing partnership with Binance. Changpeng Zhao “CZ”, the CEO of Binance, agreed to step in and provide liquidity to what was beginning to look like a bank run. Bankman-Fried announced that the initiative was user-centric, which benefits the entire industry.
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc).
— SBF (@SBF_FTX) November 8, 2022
CZ also confirmed that Binance would step in to help FTX with its liquidity crisis and the CEO tweeted a letter of intent to buy FTX.
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
Since November 7, FTX had been experiencing liquidity problems after news of Alameda Research’s strange accounting records broke. As FTX battled withdrawals, even freezing them at one point, Binance announced that he would be selling the entire FTT allocation he owned.
During the face-off between the two exchanges, the price of FTT fell 38.7%, from $25.71 to $15.76, and the price of SOL fell 31.23%, to a 5-month low of $25. Following news of a possible agreement between FTX and Binance, the price of FTT bounced over 20%, but is still trading well below what had been its long-term support, the $22 level.
The BNB price had also suffered in recent days, falling 14%, but the news that Binance had agreed to acquire FTX was followed by the exchange token seeing a 25% surge in an hour.
Although the story is still unfolding and many unknown variables remain, the cryptocurrency market has generally reacted positively to the news. Bitcoin (BTC) briefly broke above the $20,000 mark before falling back into the $19,800 range, while Ether (ETH) price continues to trade above $1,500.
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