Decentral Block Post

Bitcoin (BTC) fell below $17,000 on Nov. 9 as rumors spread over crypto exchange Binance exiting a deal to buy embattled competitor FTX.

Binance CEO: "Do not trade FTT"

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $16,936 on Bitstamp before rebounding.

The latest dive hit an already shaky market, which had reacted badly to news that FTX had asked Binance for financial assistance.

In a note to staff shared on Twitter, Binance CEO, Changpeng Zhao (known as “CZ” in the crypto industry), told them to refrain from trading FTX’s in-house FTT (FTT) token.

“I want to remind everyone: DO NOT trade FTT tokens. If you have a bag, you have a bag,” it read.

Blockchain software technology firm ConsenSys continues working on expanding blockchain interoperability by introducing a new tool to the MetaMask wallet.

Metamask users can now bridge across multiple blockchain networks using MetaMask Bridges, which aggregates different blockchain bridges in one place, ConsenSys announced on Nov. 9.

MetaMask Bridges supports major blockchains compatible with Ethereum Virtual Machine (EVM), including Ethereum, Avalanche, the Binance Smart Chain and Polygon. The new tool allows bridges of Ether (ETH) and Wrapped Ether (WETH), major stablecoins and native gas tokens, the firm said.

The new bridge feature enables Metamask users to move tokens from one blockchain network to another without having to do research to find and choose a reliable bridge.

“There are a ton of different bridges out there, each supporting various networks and tokens,” MetaMask Bridges product manager Angela Potter told Cointelegraph. She noted that bridge costs, speed and security properties vary a lot from one bridge to another, requiring users to manually check a lot of data each time before proceeding with a bridge.

Solana (SOL) is on the track to log its worst daily performance on record.

On Nov. 9, SOL's price dropped more than 40% to around $16 primarily due to its association with Sam Bankman-Fried, the founder of crypto-focused hedge fund Alameda Research and cryptocurrency exchange FTX.

Sam tokens get 'fried'

Fried was an early investor in the Solana blockchain project via Alameda Research. On Nov. 8, the entrepreneur's estimated wealth plunged from a whopping $15.6 billion to around $1 billion, according to Bloomberg Billionaires Index.

At the core of this wipeout was a near-collapse of FTX. On Nov. 6, Binance, FTX's rival exchange and early investor decided to sell its $2 billion stake, which it was holding in the form of FTX's native token, (FTT). In response, FTT's price crashed by over 85% and was trading for around $3.60 as of Nov. 9.

Alameda Research's balance sheet reportedly was worth around $12 billion as of June 30, out of which half was FTT. The firm allegedly had $8 billion in liabilities on the same day, raising speculation about its potential insolvency after FTT's massive crash.

The rumors about the possible liquidity crisis for the world’s third-largest crypto exchange turned out to be true. Just a day after assuring funds are fine, and they have the assets to back customer’s funds, FTX CEO Sam Bankman-Fried (SBF) announced on Tuesday that Binance has shown intent to acquire the global crypto platform to help with the liquidity crisis.

The liquidity crunch came as a surprise to many, given FTX bailed out numerous firms during the crypto contagion caused by the downfall of LUNA and the insolvency of 3AC.

Even as the crypto community process the events of the past 24 hours, the focus has now shifted toward other SBF-owned entities, especially Alameda Research, a leading principal trading firm. Alameda and FTX merged their venture capital operations in August 2022. Speculation mills are rife that Alameda reportedly faced a crisis itself during the crypto contagion in the second quarter and FTX bailed it out, which eventually came to bite it back.

Lucas Nuzzi, the head of the crypto analytic firm Coinmetric, took to Twitter to point out the FTT market cap increased 124.3% on September 28 when 173 million FTX Token (FTT) worth over $4 billion became active on-chain. Nuzzi pointed out that on the same day, a total of $8.6 billion worth of FTT tokens were moved on-chain.

Related: SBF tumbles off Bloomberg’s billionaire index after trouble at FTX

As the liquidity crisis and acquisition of cryptocurrency exchange FTX continues, Binance CEO Changpeng “CZ” Zhao assured his community of insurance of sufficient funds backing the network. 

In a tweet on Nov. 9, CZ said that the exchange has once again topped its Secure Asset Fund for Users (SAFU) at $1 billion equivalent in light of “recent price fluctuations.”

The tweet included links to two reserve accounts, one of which holds both the Binance stablecoin (BUSD) and the native token of the network Binance Coin (BNB) with an equivalent worth of $700 million. 

The other wallet revealed Bitcoin (BTC) holdings worth around $300 million.

Binance’s SAFU began in 2018 by allocating 10% of the trading fee into a fund that is solely dedicated to backing up user holdings in the case of an incident. In February of this year, the fund hit $1 billion for the first time.

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.

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.

Chainlink (LINK) returned to mimic the broader crypto market downtrend as its price fell alongside top coins Bitcoin (BTC) and Ether (ETH) on Nov. 8. 

LINK plunged by as much as 10% into the day to reach $8. While BTC and ETH slipped by approximately 6.5% and 9%. That contrasts with the trend witnessed on Nov. 7, wherein LINK rallied 14% to $9.25, its three-month high, while BTC and ETH dropped 1.5% and 0.5%, respectively.

Overall, on a week-to-date timeframe, Chainlink has outperformed both Bitcoin and Ethereum. 

What's making Chainlink stronger

LINK's price has rebounded by nearly 75% after bottoming out at $5.29 in May. Notably, the Chainlink token's recovery rally has coincided with a persistent increase in the supply held by its whales (entities that hold at least 1,000 LINK).

The Chainlink supply percentage held by addresses with a balance between 1,000 LINK and 1 million LINK has risen to nearly 23% in November from 18.2% in May, according to Santiment data. This indicates that rich investors may have been the key players behind the LINK price recovery.

The recent concerns related to the volatility of FTX Token (FTT) seeped into FTX CEO Sam Bankman-Fried’s other business operation, Alameda Research, as the BitDAO community requested information about Alameda’s BitDao (BIT) holding commitment.

On Nov. 2, 2021, BitDAO swapped 100 million BIT tokens with Alameda in exchange for 3,362,315 FTT tokens with a public commitment to hold each other’s tokens for three years, so until Nov. 2, 2024. Given the rising uncertainties and speculations, the BitDAO community was quick to react to the sudden fall of BIT prices on Nov. 8, 2022, suspecting Alameda of dumping the BIT tokens and breaching the three-year mutual no-sale public commitment.

To narrow down the reasons for BIT’s price drop, the BitDAO community requested an allowance for monitoring and verifying Alameda’s commitment to holding BIT tokens. BitDAO provided proof of honoring its side of the commitment by sharing an address that shows BitDAO Treasury holding all 3,362,315 FTT tokens.

In return, the community gave Alameda a deadline of 24 hours to prove its commitment, requesting that:

“The preferred method is for Alameda to transfer the 100 million $BIT tokens to an on-chain (non-exchange) address for the BitDAO community to verify, and hold until the end of the agreement.”

Bitcoin (BTC) and crypto markets fell heavily into Nov. 8 as contagion from the FTX debacle spilled over.

Analysts dismiss FTX insolvency fears

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD falling to $19,351 on Bitstamp — its lowest levels since Oct. 25.

The pair, along with altcoins large and small, had already begun to show weakness as moves by Binance to cancel exposure to FTX’s in-house FXT Token (FTT) token were confirmed by CEO Changpeng Zhao.

In a Twitter thread later on Nov. 7, Zhao defended the decision, while FTX CEO Sam Bankman-Fried attempted to reassure markets that his trading platform was solvent.

“There were questions about a large ($580m) FTT deposit to Binance, and we were transparent about the fact that we are closing our FTT position,” part of one of Zhao’s tweets read.

Recent developments in the Ripple vs Securities and Exchange Commission (SEC) case appear to have bolstered investor confidence in XRP-tied investment products, according to investment data from CoinShares’ head of research James Butterfill. 

In its latest Digital Asset Fund Flows published on Nov. 7, Butterfill noted that XRP investment products have seen a third consecutive week of institutional inflows, clocking $1.1 million.

Butterfill said the figures imply "improving investor confidence as the SEC case against Ripple looks increasingly fragile."

The last few weeks have seen Ripple Labs gaining increasing support from heavy hitters in the crypto industry including Coinbase and the Blockchain Association. 

In a Nov. 4 post, General Counsel for Ripple Stuart Alderoty announced to his 89,000 followers that "A dozen independent voices - companies, developers, exchanges, public interest and trade assoc's, retail holders” had offered their help to explain how “dangerously wrong the SEC is."

FTX founder and CEO Sam Bankman-Fried took to Twitter again on Nov. 7 to claim that "a competitor is trying to go after the cryptocurrency exchange with false rumors", while also calling for collaboration with the rival exchange Binance.

The comments follow a statement from Binance CEO Changpeng “CZ” Zhao concerning the liquidation of the exchange's position in FTX token (FTT) as “post-exit risk management” over the weekend.

FTX "assets are fine", according to SBF, who also alleged that the exchange has enough funds to cover all clients holdings and does not invest client assets, even in treasuries. He also said that:

"[FTX] It's heavily regulated, even when that slows us down. We have GAAP audits, with > $1b excess cash. We have a long history of safeguarding client assets, and that remains true today."

Binance co-founder & Chief Customer Service Officer Yi He clarified that the sell-off of FTT had nothing to do with the alleged war between the two exchanges.

Bitcoin (BTC) stayed lower at the Nov. 7 Wall Street open as the day before the United States midterm elections opened to flat equities performance.

Crypto wobbles on FTX woes

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD nearing $20,600 at the time of writing — a three-day low.

Volatility was expected around the midterms and the Consumer Price Index (CPI) print for October later in the week.

An additional hurdle in the form of controversy over trading platform FTX added to the market’s cold feet, with commentators wary of unnecessary damage to growth.

“This whole thing is incredibly bad for the industry, and especially for retail,” popular trader and analyst Pentoshi summarized.

A recent price rally in the Solana (SOL) market ran out of steam midway as traders' attention shifted to crypto-focused hedge fund Alameda Research's insolvency rumors.

Alameda Research insolvency rumors affect SOL 

On Nov. 7, SOL's price plunged nearly 6% to about $30.50. The intraday selloff came as a part of a broader pullback trend that started on Nov. 5 when SOL peaked at around $38.75. Between then and now, the Solana token is down over 20%.

The beginning of SOL's plunge coincided with reports that Alameda Research has liabilities worth $8 billion but may not have liquid assets on its balance sheet to meet those obligations.

Interestingly, the value of all those assets plunged synchronously in the past 48 hours — including SOL, as well as FTX Token (FTT), Serum (SRM), and Oxygen (OXY) — on fears of cascading liquidation if Alameda Research becomes insolvent.

Google partnership, NFT growth

Nevertheless, traders showed interest in holding SOL's price above $30, a technical support level,on Nov. 7. One reason could be a flurry of optimistic news that emerged over the weekend, including the launch of smartphones, dApp stores, and a Google Cloud partnership.