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Cryptocurrency Market Review

11/11/2022 1:26 PM

This week, the cryptocurrency market has been actively declining, and currently, BTC is trading around 17300.00 (–22.2%), ETH is at 1250.00 (–28.4%), USDT is around 0.9991 (–0.1%), BNB is at 295.00 (–12.6%), and USDC is at 1.0027 (+0.3%). The total market capitalization corrected to 0.871B dollars, while the share of BTC dropped to 38.1%.

Serious pressure on the digital asset sector is exerted by the situation around the FTX exchange, which began to develop after the head of the world's largest cryptocurrency platform Binance, Changpeng Zhao, announced that he was withdrawing from the investment agreement with the company and refusing to operate with its FTT token, which was caused by suspicions of overbalancing of Alameda Presearch, closely associated with FTX, and suspicions of misuse of client funds. It caused a massive withdrawal of funds by investors, resulting in the FTT token losing about 90% of its value. However, after analyzing that the current situation would hurt the entire digital sector and could also provoke a serious outflow of players from the market and further price declines, the heads of Binance and FTX tried to negotiate. They agreed on the sale of assets, which was supposed to ensure the preservation of its clients' funds and keep the exchange from bankruptcy. However, the market's hopes for stabilizing the situation were short-lived, and within a few hours after the announcement of the agreement, Binance withdrew from it, which led to an additional collapse of the leading cryptocurrencies. In a statement, the company said that the problems associated with the misuse of FTX customer funds were more serious than expected, so there was no way for her to help.

Throughout the development of the crisis around FTX, cryptocurrencies were rapidly losing value and managed to win back part of the lost positions only on Thursday, after the release of October data on inflation in the United States, which reflected a serious slowdown in its growth from 8.2% to 7.7%, while Core CPI adjusted from 6.6% to 6.3%. This statistic gave investors hope for a slowdown in the rate hike by the US Federal Reserve and the weakening of the US currency against its main competitors.

In turn, the Japan Financial Services Agency (FSA) demanded that FTX Japan (a subsidiary of FTX) stop over-the-counter derivatives transactions and receive new deposits. The US Securities and Exchange Commission (SEC), together with the Department of Justice, launched an investigation into the activities of the FTX exchange after its liquidity crisis and also announced inspections of the Binance and Coinbase sites. Tether has begun locking up 43.3M dollars worth of USDT tokens held by FTX. According to analysts at JPMorgan Chase & Co., the crisis is developing too quickly, and market participants do not fully realize its danger, but as soon as this happens, a cascading liquidation of open positions may begin, and the price of BTC may drop to 13.0K dollars, pulling along with other digital assets.

Next week, the decline in cryptocurrencies may continue.

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