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Bitcoin (BTC) liquidated $200 million of long positions on Nov. 8 as BTC price briefly tumbled to two-year lows.

BTC price sets new two-year low

Data from Cointelegraph Markets Pro and TradingView revealed carnage across crypto price charts as exchange FTX kept the mood low.

After initially rebounding over $20,000 on news that the embattled FTX might be bought out by competitor Binance, panic returned after the Wall Street open.

BTC/USD lost $2,000 in under two hours, seeing a sudden plunge that set a low of $17,120 on Bitstamp.

The last time the pair traded at that level was in late November 2020, meaning Bitcoin managed to beat the previous macro lows of $17,600 set in June this year.

Following the liquidity crisis and acquisition of cryptocurrency exchange FTX, Binance CEO Changpeng “CZ” Zhao said his exchange will soon start a Proof-of-Reserves audit system to allow verification of its digital asset holdings.

In a Nov. 8 Twitter post, Zhao pledged to implement a Proof-of-Reserve mechanism at Binance to provide “full transparency” through the use of Merkle Trees — a data structure used to encode blockchain data more efficiently and securely.

A Proof-of-Reserve audit is ordinarily conducted by an independent third party to ensure the custodian’s assets are owned as claimed.

The Binance CEO’s intention to implement Proof-of-Reserves comes after Binance agreed to buy rival cryptocurrency exchange FTX on Nov. 8, who’s been rumored to be on the brink of financial collapse despite CEO Sam Bankman-Fried initially dismissing the claims.

Cointelegraph contacted Binance to confirm if the exchange had begun implementing a Proof-of-Reserve system but did not immediately receive a response.

Binance CEO Changpeng “CZ” Zhao has shared his take on "two big lessons" to be learned from the FTX saga, saying cryptocurrency firms shouldn’t use their own tokens as collateral and should also keep “large reserves.”

In a Nov. 8 tweet, Zhao laid out two learnings after the significant “liquidity crunch” at FTX which has ultimately resulted in a non-binding letter of intent from Binance to acquire the struggling exchange.

Zhao shared that his first lesson is to ensure a firm's collateral should not consist of a token that it has created, and claims his exchange’s token — Binance Coin (BNB) — has never been used as collateral for its services.

FTX’s liquidity issues appeared to have come after a Nov. 6 tweet from Zhao saying Binance would be liquidating its holdings of FTX token (FTT) following “recent revelations” related to reported ties between FTX and the trading firm Alameda Research showing the firm had significant FTT holdings.

While Binance does not currently disclose proof of what reserves it uses as collateral, Zhao mentioned in a Nov. 8 tweet that in an effort to be fully transparent Binance will soon provide proof of reserves, adding:

Both Coinbase and Kraken's platforms were down or experiencing intermittent latency issues on Nov.8, amid market turbulence, according to users' complaints on Twitter. This news followed the disclosure that crypto exchange Binance intends to acquire its rival FTX earlier in the day.

According to Twitter users, services were limited in both exchanges, with issues related to connectivity to the platforms and unconfirmed rumors of halted withdrawals.

On its support profile, Coinbase said it was "experiencing network connection issues for Coinbase.com, Coinbase Pro, and Coinbase Prime. This could result in difficulty signing in. If you’re already signed in you may experience slow loading across web and the mobile app", claiming that the issue was related to the high level of new user sign-ups and transfers to the platform today.

Kraken did not comment on the issues on its channels, but highlighted that it uses Proof of Reserves audits, enabling clients to verify balances held on the exchanges and its backed assets as well. 

With Proof of Reserves (PoR), an independent audit is conducted by a third party to check a custodian's assets are held as claimed.

After topping the $21,500 mark on Nov. 4, Bitcoin (BTC) price is down by 14% on Nov. 8, reaching a new yearly low at $17,166 and most altcoins are following suit. 

While the Binance and FTX news initially caused an uptick in the market, the day turned south as various unconfirmed sources speculate that FTX’s losses could show a $6 billion deficit.

This price decline breaks Bitcoin’s short-term correlation to the stock market, with the tech-heavy Nasdaq down only 0.32%, while the Dow Jones gained 0.48% on the back of investors’ optimism about the Nov. 8 U.S. Midterm elections.

In the backdrop of the current volatility, $614 million in BTC longs are at risk of liquidation with over $224 million liquidated on Nov. 8. The fear for many is if the FTX situation is not resolved by Binance’s bid to purchase the exchange, a sharper sell-off in the market could trigger a liquidation cascade and send BTC price to new lows.

Let’s investigate the main reasons why the Bitcoin price is down today.

After topping the $21,500 mark on Nov. 4, Bitcoin (BTC) price is down by 14% on Nov. 8, reaching a new yearly low at $17,166 and most altcoins are following suit. 

While the Binance and FTX news initially caused an uptick in the market, the day turned south as various unconfirmed sources speculate that FTX’s losses could show a $6 billion deficit.

This price decline breaks Bitcoin’s short-term correlation to the stock market, with the tech-heavy Nasdaq down only 0.32%, while the Dow Jones gained 0.48% on the back of investors’ optimism about the Nov. 8 U.S. Midterm elections.

In the backdrop of the current volatility, $614 million in BTC longs are at risk of liquidation with over $224 million liquidated on Nov. 8. The fear for many is if the FTX situation is not resolved by Binance’s bid to purchase the exchange, a sharper sell-off in the market could trigger a liquidation cascade and send BTC price to new lows.

Let’s investigate the main reasons why the Bitcoin price is down today.

FTX Token (FTT) and Solana (SOL) endured a tough weekend of trading which saw altcoins take double-digit losses in the 15% to 30% range, but the tide turned as news broke 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 exchange. 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 billed the development as user-focused which benefits the entire industry.

CZ also confirmed that Binance would step in to assist FTX with its liquidity crunch and the CEO tweeted a letter of intent to purchase FTX.

Since Nov. 7, FTX had been experiencing liquidity issues after news broke on Alameda Research’s odd looking books. As FTX was fighting off withdrawals from their exchange, even freezing withdrawals at one point, Binance announced it would sell the entire FTT allocation they possessed.

During the disagreement between exchanges, FTT price dropped 38.7% from $25.71 to $15.76 and SOL price fell 31.23% to a 5-month low at $25. After news of a potential agreement between FTX and Binance, FTT price bounced more than 20%, but still trades well below what had been long-time support at $22.

FTX Token (FTT) and Solana’s SOL (SOL) endured a tough weekend of trading that saw altcoins take double-digit losses in the 15%–30% range, but the tide turned as news broke 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 “CZ” Zhao, CEO of Binance, agreed to step in and provide liquidity to what was beginning to look like a bank run. Bankman-Fried billed the development as user-focused and benefiting the entire industry.

CZ also confirmed that Binance would step in to assist FTX with its liquidity crunch, with the CEO tweeting a letter of intent to purchase FTX.

Since Nov. 7, FTX has been experiencing liquidity issues after news broke surrounding Alameda Research’s odd-looking books. As FTX was fighting off withdrawals from their exchange, even freezing withdrawals at one point, Binance announced it would sell the entire FTT allocation it possessed.

During the disagreement between exchanges, FTT price dropped 38.7% from $25.71 to $15.76, and SOL price fell 31.23% to a five-month low at $25. After news of a potential agreement between FTX and Binance, FTT price bounced more than 20%, but it still trades well below what had been long-time support at $22.