© Provided by TheStreetThe cryptocurrency market fell 11% in 24 hours on questions about the increasing solvency of crypto companies.
The cryptocurrency industry is in a new crisis of confidence.
As cryptocurrency prices stabilize, a new drama has shattered the sense of calm that finally entered the cryptocurrency market this year.
The implications and consequences of this drama have yet to be determined as the surprise is huge.
Sam Bankman-Fried, who this summer became the savior of a crypto firm on the brink of bankruptcy, has agreed to sell his empire to his rival Changpeng Zhao within 24 hours.
The empire consists of the FTX.com exchange, two of which are sports star ambassadors Stephen Curry and Tom Brady. There is also the high-frequency trading platform Alameda Research. Financial details of the transaction were not disclosed.
But the operation, which looked more like Zhao's bailout, showed that FTX and Alameda were on the brink of bankruptcy.
"This afternoon, FTX reached out to us for help," Binance co-founder and CEO Zhao wrote on November 8. "There is a serious liquidity crisis. To protect users, we have signed a non-binding LOI. http://FTX.com and help overcome the liquidity crisis. We will do a full DD in the coming days,” he said.
If last summer, at the height of the credit crisis, Bankman-Fried extended a line of credit to fintech BlockFi and acquired a stake in popular trading app Robinhood ( HOOD ) - Get free reports , who is safe or immune to a crisis liquidity?
On November 9, this question was widely circulated. Investors are wondering what corpses the crypto industry still has in its closet. Their disobedience is manifested in the fall in the price of cryptocurrencies.
The cryptocurrency market fell 11% in 24 hours. Now this market is worth 913 billion dollars. As such, it is down more than $2 trillion from its all-time high of $3 trillion reached in November 2021. During the year, the situation worsened significantly.
The price of bitcoin (BTC) fell 10% to $17,736.17, according to CoinGecko. The most popular cryptocurrency appears to be on its way to new lows. BTC has currently lost 74.3% of its value since hitting an all-time high of $69,044.77 on November 10, 2021.
Ether (ETH), the second largest coin by market value, fell 17% to $1,230.39. ETH is down 75% from its all-time high of $4,878.26 on November 10, 2021.
Cryptocurrencies associated with decentralized finance (DeFi) projects are on the rise. Solana (SOL) is down 30%, Cardano (ADA) is down 7%, and Polkadot (DOT) is down 5.8% in the last 24 hours.
Meme coins Dogecoin (DOGE) and Shiba INU (SHIB) lost 11.4% and 9.5% respectively.
The perception of the cryptocurrency industry has changed. Bankman-Fried and his empire are considered by many experts and industry sources to be the most financially stable players. His lack of cash is a blow that will leave an indelible mark on the cryptocurrency sector for years to come.
There are also questions about the deal with Zhao and his company Binance, the world's largest cryptocurrency and digital asset exchange.
"There is good reason to believe that the risk of further contagion remains due to the Alameda loan default," said Sean Farrell, head of digital asset strategy at FS Insight. "Strategically, we believe it makes sense to reduce our dependence on Solan ($SOL) in the near future."
He added: "Also, given the current uncertainty, it may be wise to save some money in case other major cryptocurrencies fall further."