Weekly Update
The global crypto market cap is up by 3.85% to $868.65B at the time of writing this article. Over the past 24 hours, the overall volume of the cryptocurrency market has decreased by 28.09% to $137.26B.
DeFi’s total 24-hour volume is $6.39B, or 4.65% of the overall crypto market volume. All Stablecoin volume is currently $133.47B, or 97.24% of the 24-hour volume of the whole crypto market. DeFi’s and Stablecoin’s total 24-hour volume has remained almost the same since last week.
Bitcoin was trading at $17,281.15 at the time of writing. According to data from CoinMarketCap, Bitcoin’s dominance is currently 38.17%, a decrease of 0.19% from the previous day. In the last 24 hours, the price of ETH increased by 7.61% to $1,264.63, while the price of BNB went up by 5.64% to $296.86.
The crypto market has plummeted in the last week as a result of the news of FTX’s liquidity crisis. Since then, the market has been on the mend.
What Happened to FTX?
Before we begin, it is essential that you are aware of the following key events:
- In May 2019, Sam Bankman-Fried and Gary Wang established FTX.
- A year and a half after Bankman-Fried and Wang founded the company, Binance’s Changpeng Zhao bought a 20% investment in FTX.
- In 2021, Binance’s Changpeng Zhao sold his stake in FTX to Sam Bankman-Fried, who paid for it partially with FTT tokens.
With that in mind, here is a recent chain of events. As of February 2022, FTX was one of the largest crypto exchanges in the world, with over one million users. On November 2, the crypto publication CoinDesk reported on a leaked document that appeared to show that Alameda Research, a hedge fund run by Sam Bankman-Fried, held an unusually large amount of FTT tokens. Although FTX and Alameda are intended to be separate businesses, the report claimed that they had close financial ties.
However, this was not the primary cause of the crash. That happened a few days later when the founder of Binance sent out a tweet on the matter. On November 6, Binance announced that it would sell its FTT tokens “due to recent revelations”. As a result, the price of FTT plummeted, and traders rushed to exit FTX out of fear. FTX scrambled to process withdrawal requests totaling an estimated $6 billion over three days. It appeared to be in a liquidity crisis, which meant it lacked the funds to fulfill requests.
On November 8th, Binance announced that it had reached an agreement to buy FTX and that “Binance has the discretion to pull out from the deal at any time”. Sam Bankman-Fried said in a separate announcement that the agreement would protect customers and allow FTX to finish processing their withdrawals.
Binance announced on November 9 that it would no longer purchase FTX, claiming that this decision was made “as a result of corporate due diligence”. It also mentioned regulatory investigations and reports of mishandled funds.
On November 10th, FTX announced an agreement with Tron, a blockchain platform, to swap certain tokens from FTX to other crypto wallets.
Since then, the market has been steadily recovering, with the prices of bitcoin and other cryptocurrencies gradually rising.
