Bitcoin and the overall crypto markets are in the middle of an abrupt reversal as two of the world’s largest crypto exchanges announce a deal that’s sending shockwaves through the industry.
Following rumors of FTX insolvency and liquidity troubles, Binance CEO Changpeng Zhao and FTX CEO Sam Bankman-Fried announced that pending a due diligence process, Binance will acquire FTX.
“Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending [due dilligence] etc).”
Binance CEO Changpeng Zhao confirmed the agreement via Twitter, saying that FTX initiated the agreement with a request for help. Zhao also warned that FTT, FTX’s native token, would likely weather heavy volatility for the time being.
“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding [letter of intent], intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.”
Prior to Bankman-Fried’s announcement, FTX appeared to be having trouble processing withdrawals as rumors swirled about the exchange and its trading arm Alameda Research’s solvency.
FTT also witnessed huge sell pressure, dropping 34% after it lost the $22 support level down to the $14 range.
Once news of the Binance takeover came to light, however, FTT quickly jumped 37% in an instant.
The rest of the crypto markets, which were also spooked by the drama, reversed as well. Bitcoin (BTC) jumped by 6% from $19,360 to $20,643, while Ethereum (ETH) spiked by nearly 10% from $1436 to $1579.
BNB, Binance’s native token, is currently the top performing altcoin of the top 100 crypto assets in the last 24 hours. At time of writing, BNB is up 12% on the day.
At time of writing, the total crypto market cap is up 4% on the day, bouncing from a low of $905 billion to $951 billion.
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Featured Image: Shutterstock/Catalyst Labs