Bitcoin, as well as the entire crypto market, continues going through tough times. And it seems only to get worse, resulting in bitcoin going down. In just a day, the price of Bitcoin collapsed by 20%. But that’s not all — a couple of days ago, the largest crypto exchange FTX went bankrupt. Why is bitcoin going down today? Are these events related? Let’s try to figure it out today!
Why Bitcoin Price Is Going Down: What Is Happening?
Why is bitcoin going down? Well, on November 8, the price of Bitcoin fell to $18,400. This was the first time since October 25 that the token has dropped below $20,000. But that was just the beginning.
Yesterday, Bitcoin’s price fell as low as $15,625, and it was the first time the largest cryptocurrency has fallen below $16,000 since November 2020. Why is bitcoin going down right now?
For 9 months of 2022, the rate of Bitcoin fell by almost 2.3 times. Experts believe that the BTC price may further decrease by at least half.
Analysts from Glassnode Insights noted that the cryptocurrency market is gradually moving toward the so-called bearish phase. This means that the value of assets can drop sharply by 20% or more.
Bitcoin continues to fall for the third trading session in a row. But why is Bitcoin price going down?
Why Is Bitcoin Going Down Right Now: The Fall of FTX
Due to the crisis and undisclosed internal issues, Sam Bankman-Fried, founder and director of the FTX crypto exchange, said that without additional investment, the company will have to declare bankruptcy. As a result, this happened after the failure of the deal on the FTX exchange purchase by the Binance crypto exchange.
The other day, Bankman-Fried told investors that his cryptocurrency exchange faced a deficit of up to $8 billion and needed $4 billion in additional investment to remain solvent.
‘I screwed up,’ Bankman-Fried told investors during a phone call, according to anonymous sources. He said he would be ‘incredibly grateful’ if investors could help.
FTX has a well-known list of sponsors, such as Sequoia Capital, BlackRock, Tiger Global Management, and SoftBank Group. In doing so, many have withdrawn their holdings in FTX.com and FTX.us, indicating that large investors fear a crash.
The latest glimmer of hope for FTX was a potential deal with Binance and its CEO, Changpeng Zhao. It was planned that Binance would buy out the FTX exchange, take control of it and be able to cover the budget deficit. However, this did not happen.
Failed FTX-Binance Deal: What Happens Next
The source said that representatives of the FTX exchange repeatedly told investors during a conference call on Wednesday, October 9, that Changpeng Zhao is not reluctant to buy the exchange. About an hour later, Binance stated that the deal was, in fact, being canceled.
The Binance cryptocurrency exchange CEO, Changpeng Zhao, said in a statement:
In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
As a result, the withdrawal of funds from the exchange is completely frozen, and most likely, no one will be able to intervene.
Also, the Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating whether the firm mishandled client funds, as well as its relationship with other parts of the Bankman-Fried crypto empire, including Alameda Research, Bloomberg News reported.
As a result of all these events, the crypto market literally collapsed, ending with the bitcoin price going down — the very first cryptocurrency fell below $16,000 for the first time since November 2020.
Why is bitcoin going down? When will the crypto market recover? Feel free to share your thoughts in the comments below!