March 29, 2024

What Does The Acquisition Of Competitor FTX By Binance Mean For Crypto?

Binance, one of the largest Crypto platforms, has endorsed a non-compelling resolution to purchase FTX.COM. Such a move was the most prominent and astonishing financial decision ever witnessed in the industry. Binance sort for ways of assisting its competitor suffering a “liquidity crunch,” which caused an uproar among its investors.

Sam Bankman-Fried and Changpeng Zhao, the CEOs of FTX and Binance, endorsed a deal yesterday. Despite their fierce competition, both parties saw the need for such a resolution in the current bearish market. The discovery of over $6 billion in withdrawals from FTX within 72 hours prompted CZ intervention. 

In confirmation of the news, CZ tweeted, “FTX requested our assistance on Tuesday afternoon. There was a problem with a substantial liquidity crunch on the platform. To safeguard investors, we endorsed a non-binding deal that will enable us to acquire FTX. We will conduct an ample DD in subsequent days.”

An Overview of FTX CEO Bankman-Fried’s Announcement

Sam-Bankman revealed that his firm has reached out to Binance for help in combating the Liquidity crunch. He tweeted, “events have reached full circle, and all FTX users are equal. We and Binance exchange have endorsed a resolution for FTC.com, but DD is still pending.” The above statement was a stunning and rapid transition of circumstances for the FTX CEO.

Several reactions have emanated from various crypto communities and analysts regarding the recent development. One such reaction is a tweet from Dan Raju, which revealed how fearful and shocking the news was to the crypto community. 

He said, “it’s unbelievable to think that the liquidity crunch will swallow a large crypto platform like FTX. He was surprised that the firm’s biggest competitor would come to its rescue.” However, Binance’s decision was needed in the fortunes of FTX CEO because investors are withdrawing their support. 

FTX Current Situation and The Possible Solution

FTX’s native coin FTT has continued to dump as the price crashed to $6 from $28 on Sunday.  According to Coinmarket Cap analysis, the token’s price drastically reduced by 80% within 24 hours on Tuesday. The usage of leverage by FTX’s native token caused the numerous susceptibilities it encountered. Binance intervention may not be permanent because the firm may decide to compromise its decision. 

Crypto analysts believed that CZ’s intervention might become a bail-out that would rescue the crypto market. They revealed that no crypto trader is willing to experience another version of the Luna Terra crash. Therefore, crypto investors are withholding their funds to avoid another significant loss. Some analysts opined that If Binance’s intervention fails, the crypto market will become more bearish in the subsequent weeks.

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