Crypto Crash Is Led by a Whopping 88 Percent Plunge in FTX

November 8, 2022

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10:53 pm

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17 comments

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Economics

FTX chart courtesy of CoinDesk. Price points added by Mish.

What’s Going On?

The Wall Street Journal reports Crypto Exchange Binance to Acquire Rival FTX

Cryptocurrency exchange FTX, just months removed from looking like a shining survivor in a struggling industry, succumbed Tuesday to a sudden liquidity crunch of its own and was taken over by rival Binance.

The deal signals a power shift in the crypto world, which has been decimated by rising interest rates and investors’ retreat from risk. The pact marks a victory for Binance founder Changpeng Zhao and a humbling comedown for Sam Bankman-Fried, the founder of FTX, which had been growing in size and recognition before a clash between the two men set off a series of events that shook investor confidence in his firm.

Valuation Plunge

The 44 percent rally was due to the announcement of a deal with Binance. It was all over in a matter of about 4 hours, rally to bottom.

FTX was valued at $32 billion in a funding round in January. At $5.52 it’s market cap is now $732 million.

The WSJ commented “FTX is the brainchild of Sam Bankman-Fried, the millennial billionaire hailed as a savior of the crypto industry this summer.“

Bitcoin Response to FTX

The Bitcoin reaction in similar in time but certainly not magnitude.

Ethereum is down about 15 percent on the day after an initial rally of 9.8 percent.

Dogecoin is also similar but with a much bigger hit than Bitcoin or Ethereum. It’s down 19 percent after a 15 percent rally.

Relative Safety in Bitcoin

If you have not figured this out by now, there is at least relative safety in Bitcoin vs all the altcoins and tokens.

Questions Asked

We can now answer some questions but not others.

Yesterday, BeInCrypto asked Can Bitcoin Hold Above the $20,000 Level?

The answer is no.

You won the game of thrones.

— Richard Heart (@RichardHeartWin) November 8, 2022

FTX founder Bankman-Fried said his first priority was to protect customer assets.

I have questions.

What about his own? Is Bankman-Fried still a billionaire? Did he bail ahead of the Binance announcement? How much is Bankman-Fried worth now?

Does anyone know?

If so, I will post answers. as an addendum.

But I do know this: Ahead Of His Crypto Firm’s Cash Crunch, Billionaire Sam Bankman-Fried Spent Tens Of Millions On Politics

Question Answered

One Answer In via Bloomberg

That leaves SBF’s net worth at about $1 billion, down from $15.6 billion heading into Tuesday. The 94% loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg.https://t.co/f2lZ1SyGQL

— Mike “Mish” Shedlock (@MishGEA) November 8, 2022

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17 Comments

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Six000mileyear

1 year ago

And the plunge continues.

KidHorn

1 year ago

I would rather invest in Powerball tickets than crypto.

davidyjack

1 year ago

They digitized Tulips.

PreCambrian

1 year ago

What will drive a nail in the coffin of most cryptos is when Tether implodes. It is the third largest crypto by market cap and it is supposedly a stablecoin. However if everyone tries to withdraw like they did with FTX, there will be no funds available. Much Bitcoin was bought with Tether.

You almost couldn’t make this stuff up. There are cryptos invented just to trade cryptos and supposedly these cryptos have value. You can create something out of thin air to by something else made out of thin air and then sell it for real money (as “real” as money is these days).

CNNfakeNews

1 year ago

Reply to PreCambrian

Of course most cryptos won’t make it. NFTs are a joke. ISO 20022 coins will be the last that are standing after adoption. A handful of coins that is, but some people are going to get generationally wealthy (like the first purchasers of Bitcoin did) when full adoption takes place. Only 2% of the world is invested in crypto. The crowd is ALWAYS wrong and they are avoiding crypto because they have ZERO foresight. Sad really…

SAKMAN

1 year ago

Reply to CNNfakeNews

Can you pay taxes in crypto?

If not, what good is it? Does it’s supporters have guns that will make us pay taxes in bitcoin? Hah, “You and what army?”.

My father has made a 140000% return on his first investment into Danaher if your answer was “returns”. I can tell you what Danaher does.

CNNfakeNews

1 year ago

Reply to SAKMAN

Sure, why not. It’s a currency.

SAKMAN

1 year ago

Reply to CNNfakeNews

Nope, you pay taxes in the currency of the country where you are paying taxes. I can’t pay my US taxes in anything other than USD.

StukiMoi

1 year ago

Reply to SAKMAN

“Can you pay taxes in crypto?

If not, what good is it?”

You could, conceivably, AVOID paying a chunk of taxes because of it……

With rates, and taxation schemes, ever rising and ever more extractive and purely arbitrary graft; Not paying some, isn’t so bad.

There derives no benefit to you, from having Kim-the-Korean-guy being able to; maximally easily, arbitrarily and whenever he feels like it; take away all your salary and all you own, by simply pressing a printing button. Noone who are not both unusually incompetent at anything value-adding and close-to-Kim, benefits from that sort if currency being the one in wide circulation. If you truly believe such arrangements are beneficial for most regular people, I don’t know what to say…….

Technology rendering a possible solution to the above problem, is never a bad thing. It may not completely eviscerate it over night. Heck, it may not even ever amount to as good a solution as people simply using Gold would be. But compared to fiat, seashells are great as currency. As are daughters. Salt grains even. All of them much, much better than anything Kim or Powell can just print up in order to steal from everyone else. And while math education nor comprehension ain’t all that anymore, in our current free-fallen idiotopia: Mathematicians aren’t so stupid they can’t, given enough time, improve upon paying taxes in lightly salted daughters.

SAKMAN

1 year ago

Reply to StukiMoi

If only the world didn’t have guns and people trying to use them (along with any technology that can be used) to control others.

When we overcome that. . . Let me know.

CNNfakeNews

1 year ago

Do you people realize that our GDP doesn’t service our debt and interest currently? Something will be backed by gold (which is being artificially held down so it can be accumulated by the banking system) to reset the debt. What do you think that will be? Digital currency is being instituted right under your nose as everybody laughs about it. Keep on worrying about abortion and the global warming scam while the elites (Blackrock/Goldman Sachs) offer crypto investments to their wealthy clients. LOL!

The more people dismiss it and hate it, the more convinced I am that it will be adopted. Thank you commenters below…

HippyDippy

1 year ago

Now THAT’S a proper bloodbath! Sounds like the dotcom crash of my stockbroker days is going to look pretty tame compared to what we’ve got coming. Imagine the hundreds of billions of dollars that no longer exist as a result of this crash. And where will it spread? How much of that wealth created by the FED is going to disappear, at least partly, due to their malfeasance? And just who’s going to be allowed to keep what’s left? What do we have for safe havens? T-bills and gold? Don’t forget that Standard and Poor’s once tried to downgrade treasuries, but they were made to tow the party line real quick. And that when FDR confiscated the people’s gold, they got it cheap because they crashed the market. I predict blood will flow in abundance like we’ve never seen in this crash. Simply too many bubbles and too much criminality for it to be otherwise. Even without ill intent, this debacle would still be criminal in its incompetence.

KidHorn

1 year ago

Reply to HippyDippy

Imagine the hundreds of billions of dollars that no longer exist as a result of this crash

The money still exists. It went to the people who sold. The buyers effectively gave it to them.

WarpartySerf

1 year ago

Reply to HippyDippy

“Even without ill intent, this debacle would still be criminal in its incompetence.”

Counterfeiters Alan Greenspan, Benjamin Shalom Bernanke, and Janet Yellen should all be prosecuted and jailed.

No problem with Kosher meals in prison. It’s a right.

HippyDippy

1 year ago

Reply to HippyDippy

By the way, in response to that moron’s insistence that we need to have a bunch of people telling us what to do with every second of our lives or else the world would just stop spinning because we are just too complex. All I need to say is “International Court of Settlements”. Of course, being completely ignorant of such terms it is meaningless to that moron, but that is inconsequential. International law is settle by arbitration. It is very much an anarchial way of handling such things as all parties are considered sovereign. Now, anyone with half a brain cell would understand that if a nation is too complex for there to be no group of criminals to rule over all of us, then obviously grouping the entire world’s population into a soup with no sovereign body to tell them what to do every minute of the day is impossible. And yet, that’s how it works. But the slave mind will not allow freedom to ever enter its realm of possibilities. Being responsible for your own actions and consequences is just too horrible a fate for the weak.

Zardoz

1 year ago

Nobody ever went broke monetizing stupidity.

RonJ

1 year ago

Reply to Zardoz

“Safe and effective.” A false marketing slogan that made Pfizer a lot of money.

Crypto Crash Is Led by a Whopping 88 Percent Plunge in FTX

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