The cryptocurrency market has plunged in value today as it reels from the near-collapse of one of the biggest exchanges, FTX, last night.
FTX, which has bailed-out a host of ailing firms in the sector and was regarded as one of the more resilient businesses in the space, announced last night it had struck a deal with its biggest rival Binance amid an extreme liquidity squeeze.
Sam Bankman-Fried, chief of FTX, had been locked in a spat with Binance boss Changpeng Zhao over the weekend after Zhao announced Binance would offload its entire stake of FTX’s token FTT, send the price plummeting and sparking a run on assets at Bankman-Fried’s firm.
Zhao dramatically announced on Twitter last night Binance had struck a deal to buy FTX to stave off collapse.
The rescue marks the latest blow to the sector amid a so-called crypto winter that has seen over a trillion dollars wiped off the value of the sector this year and sparked a string of high-profile collapses.
FTX’s token FTT shed more than 70 per cent of its value today in the wake of the deal, while Bitcoin ended a recent resurgence and tumbled ten per cent to a near-two-year low. The flagship and most valuable cryptocurrency has shed nearly 70 per cent of its value this year.
The total market capitalisation of the crypto market fell to around $850bn today, levels not seen since January 2021.
While Zhao said due diligence on the deal was yet to be conducted, a tie-up between the two biggest exchanges will fundamentally reshape the sector and will cement the Canadian-Chinese chief as its most powerful boss.
Binance was an early investor in FTX and has now come full circle to snap up the firm and seemingly end the high-profile battle between the two crypto chiefs for dominance in the sector.