In the US NY stock market on the 9th, the Dow closed with a sharp drop of 646 dollars (2.0%) lower than the previous day.
As the US midterm elections, which will serve as a prelude to the 2024 presidential election, are being counted, the prospects for the Republican Party winning the Senate and the House of Representatives, which are expected to boost stock prices, have receded. Firm selling prevailed.
There are also speculations that the turmoil in the crypto-asset market is spilling over into the stock market, particularly among related companies.
Virtual currency market
In the crypto asset (virtual currency) market, Bitcoin fell 9.7% from the previous day to $16,440.
The stock fell further after Binance, the industry’s largest exchange, announced that it had abandoned its acquisition of FTX.
It temporarily dropped to $15,512, but then recovered slightly due to a rebound due to a reactionary fall. In the futures market, a large-scale loss cut (forced liquidation) continued from yesterday.
The BTC price was $21,500 as of the 5th, but after the Alameda shock this time, it plunged more than 20% compared to the previous week. Altcoin also fell overall, Ethereum (ETH) down 10.3% from the previous day.
Binance had signed a memorandum of understanding for the acquisition to rescue its struggling competitor FTX, but after due diligence (management and financial investigation), it said it was beyond the scope of what it could support. withdrawn.
It suggested the possibility of falling into excess debt that greatly exceeds assumptions.
If the acquisition of FTX, which was the second largest crypto asset exchange in the industry, was realized, it was pointed out that it would violate antitrust laws in the United States and other countries. said that it was the decision of
The turmoil was triggered by the leak of the balance sheet (B/S) of Alameda Research, a sister company of FTX, and the sudden emergence of the risk of insolvency depending on FTX-issued tokens. It has also been pointed out that it borrowed a large amount of funds using tokens held as collateral such as FTT.
In addition, on the 7th, Binance CEO Changpong Zhao (CZ) announced that he would sell his FTT holdings, leading to panic selling.
Bloomberg reported that Binance had 23 million FTT worth $529 million as of Wednesday.
In June of this year, due to the collapse of the Terra (LUNA) price, lending giant Celsius and venture capital giant Three Arrows Capital (3AC)” went bankrupt one after another. invited a sale.
Toward the dawn of the 9th, (FTT) plunged to $2.91, down 86% from the previous day. FTX faced a severe liquidity crisis as customers were inundated with withdrawals of assets under custody.
In response, Binance has announced that it has once again expanded its Secure Asset Fund for Users (SAFU) to $1 billion. Efforts were made to resolve customer concerns.
It was established in July 2018 to protect the interests of customers by accumulating 10% of transaction fees.
Impact on relevant markets
He has made a total of 185 investments to date and has been the lead investor in 32, according to data from corporate data site Crunchbase. Major investments include liquidity staking Lido Finance (LDO), Solana-based DEX (Decentralized Exchange Serum (SRM), and L1 blockchain Solana (SOL) .
reported by Bloomberg , FTX CEO Sam Bankman-Fried told investors by the 9th that he would not be able to avoid bankruptcy (application for bankruptcy law) if he could not raise capital as it was. reported to. He said he was facing a funding shortfall of up to $8 billion (¥1.17 trillion).
If that happens, there is a high risk of liquidation of assets held and default on loans secured by FTT, which will have a wide range of impacts on related companies. Alameda Research is also an early investor in Solana (SOL), raising concerns about its impact on the ecosystem
In addition, Total Value Locked (TVL), which indicates the total deposit amount of the DeFi (decentralized finance) market for SOL-related projects, decreased by 33% in just one day. A wide range of companies, including Solend, which provides lending services on the DeFi protocol, and decentralized exchanges Raydium, Serum, and Orca, have seen a significant drop.
Distress sales were conspicuous in the Solana chain-based NFT market as well.
Solana (SOL), which was a top 10 market capitalization regular, plummeted 36.7% from the previous day and 55.3% from the previous week, retreating to 15th place in market capitalization. FTX Token (FTT) is down 91% week-on-week.