Bitcoin and crypto markets, in general, are amid an abrupt reversal as two of the world’s largest crypto exchanges announce a deal that shocks the industry. Following rumors of FTX bankruptcy and liquidity issues, Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried announced that Binance would acquire FTX pending due diligence. “Coming full circle, the initial and final investors in FTX.com are the same: we decided on a strategic deal with Binance.
Changpeng Zhao, CEO of Binance, confirmed the deal via Twitter and said that FTX initiated the deal with a request for help. Zhao also warned that FTT, FTX’s native token, would likely withstand severe volatility. “This afternoon, FTX requested our service. There is a significant liquidity crisis. To protect users, we have signed a non-binding [Letter of Intent] in which we intend to acquire FTX fully and help to deal with the liquidity crisis. We will be doing a full DD in the next few days.”
A lot needs to be done, and it will take time. We are evaluating the situation in real time because it is dynamic. Binance is free to leave the transaction at any time. We expect the FTT to be very volatile over the coming days as it develops. Before the Bankman Fried announcement, FTX appeared to be having trouble processing withdrawals due to rumors surrounding the stock market and the solvency of its trading arm Alameda Research. FTT also witnessed intense selling pressure, falling 34 seconds after the $22 support level dropped to the $14 range.
However, when the news of the Binance acquisition broke, the FTT quickly surged 37% in an instant. Spooked by the drama, the rest of the crypto markets also turned around. Bitcoin (BTC) is up 6% from $19,360 to $20,643, while Ethereum (ETH) is up nearly 10% from $1,436 to $1,579. BNB, Binance’s native token, is currently the best-performing altcoin among the top 100 crypto assets over the last 24 hours. As of this writing, BNB is up 12% on the day.
At the time of writing, the total crypto market cap is up 4% daily, from a low of $905 billion to $951 billion.