SOL and FTX Token saw a sharp rebound after headlines that Binance would acquire FTX due to liquidity issues, but will the upside last?
FTX Token (FTT) and Solana’s SOL (SOL) endured a tough weekend of trading that saw altcoins take double-digit losses in the 15%–30% range, but the tide turned as news broke that Binance could be in the process of acquiring FTX.
On Nov. 8, FTX CEO Sam Bankman-Fried first took to Twitter to announce a liquidity-sharing partnership with Binance. Changpeng “CZ” Zhao, CEO of Binance, agreed to step in and provide liquidity to what was beginning to look like a bank run. Bankman-Fried billed the development as user-focused and benefiting the entire industry.
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
— SBF (@SBF_FTX) November 8, 2022
CZ also confirmed that Binance would step in to assist FTX with its liquidity crunch, with the CEO tweeting a letter of intent to purchase FTX.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ Binance (@cz_binance) November 8, 2022
Since Nov. 7, FTX has been experiencing liquidity issues after news broke surrounding Alameda Research’s odd-looking books. As FTX was fighting off withdrawals from their exchange, even freezing withdrawals at one point, Binance announced it would sell the entire FTT allocation it possessed.
FTT 4-hour chart. Source: TradingView
During the disagreement between exchanges, FTT price dropped 38.7% from $25.71 to $15.76, and SOL price fell 31.23% to a five-month low at $25. After news of a potential agreement between FTX and Binance, FTT price bounced more than 20%, but it still trades well below what had been long-time support at $22.
SOL 4-hour chart. Source: TradingView
The price of BNB (BNB) has also suffered over the past few days, dropping by 14%, but the news of Binance agreeing to acquire FTX was followed by the exchange token staging a 25% rally within the hour.
BNB price index. Source: Cointelegraph
While the story is developing and many unknown variables remain, the broader crypto market has reacted positively to the news. Bitcoin (BTC) briefly rallied over $20,000 before slipping back into the $19,800 range, while Ether (ETH) continues to trade above $1,500.
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