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.
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
— SBF (@SBF_FTX) November 8, 2022
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.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ Binance (@cz_binance) November 8, 2022
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.
BNB price had also suffered over the past few days, dropping by 14%, but the news of Binance agreeing to acquire FTX was followed by the exchange token staging a 25% rally within the hour.
While the story is developing and many unknown variables remain, the broader crypto market has reacted positively to the news. Bitcoin (BTC) briefly rallied over $20,000 before slipping back in the $19,800 range, while Ether (ETH) price continues to trade above $1,500.
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