The crypto winter is entering its next phase. After the bankruptcy of Celsius, Terra and 3AC have now joined the FTX list as another crypto giant moves on.
FTX and the Fall of Sam Bankman-Fried
The trouble began earlier this week, with concerns about a connection between Sam Bankman-Fried’s firms, FTX and Alameda Research.
Binance CEO Changpeng Zhao said that the exchange ruin Own holdings of FTX tokens (FTT). This was due to concerns over Alameda’s solvency, as more than a third of its $14.6 billion in assets were FTT tokens.
Bankman-Fried denied the claim in a tweet, which was later deleted, but Zhao’s announcement triggered a massive liquidation of FTT, leading to a liquidity crunch for FTX.
Zhao then said that Binance would acquire the exchange, but upon further inspection of its finances, the deal failed.
Now the withdrawals have paralyzed the exchange, and Bankman-Fried is seeking a bailout of nearly $8 billion, in addition to the investigation.
This disturbance is affecting the broader crypto markets for two reasons. On the one hand, Alameda Research’s portfolio is being liquidated, which has implications for its large positions in SOL and FTT.
On the other hand, it’s shocking how a crypto icon and personality like SBF could have calculated so catastrophically wrong. Selling pressure and extreme bearishness could push the cryptocurrency market into the final phase of a bear cycle: capitulation.
Crypto Winter: The market turns bearish on the 50-month EMA
If it had broken through the 50-month EMA at around $1.007 trillion, the crypto market could have risen almost 60%.
Instead, it received a bearish rejection, bringing the market cap back to the support level of around $850 billion. If this support is broken, the crypto market could drop to as low as $766 billion or as low as $535 billion.
The Price Of FTT Could Possibly Drop To Zero, But Will It Recover?
Due to the crisis, the price of FTT fell from just $27 to around $2.5. As long as the liquidation of the FTT token continues, the selling pressure will be heavy. Theoretically, the downward scope is open to almost zero.
As the FTT token ends its liquidation, its potential recovery could be very strong. From the point of view of technical analysis no meaningful statement can be made in such extreme scenarios.
Solana price is turning below the $18-22 support area
Selling pressure affected the price of the Solana almost as much as the FTT. This is because FTX firmly integrated Solana into its ecosystem. Additionally, Bankman-Fried was an early, accepted investor in Solana.
Solana is currently residing in the support area between $18 and $22. At this point, SOL could experience a strong bounce. However, if it breaks this support, the price may decline further towards the $5 level before reaching the next support level.
Ethereum price is at horizontal support
ETH has also been hit hard. A few days ago, the price of ETH was around $1,700, but now it is around $1,200. If Ethereum breaks the $1,200 and $1,250 support, it could revisit the yearly lows near $880. If this support fails as well, the price could drop towards the area between $290 and $400.
Crypto Winter: Bitcoin Price Hits New Low for the Year
Bitcoin price has now declined from yearly lows of $17,600 to around $17,114. Again, there are more downside chances as the next BTC support level is near $13,880.
If BTC falls above the support itself, it could push deeper into the $10,800-$13,880 support area. It is doubtful whether BTC will drop below the $10,000 mark.
But if it does, how long can bitcoin stay below $10,000?
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