Bitcoin is in free fall and trading at around $16,700. A short-term squeeze is expected as institutional investors jump in to buy the dip.
In what has been a dramatic week for crypto investors, Bitcoin has dipped below $17K as news about the Binance-FTX deal falling through filtered into the market. The lowest price level registered after the news was $15,700.
Recall that an FTT selloff began after Binance announced it was liquidating its FTT holdings. Not long after, the news of FTX halting withdrawals caused a market panic. There was a slight rebound when reports emerged that Binance was going to acquire FTX and support it through the liquidity crunch.
According to Changpeng Zhao, Binance CEO, “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch.” CZ noted his team will conduct a full DD to determine if the exchange will follow through with the deal. Regardless, CZ noted that the users will remain protected no matter the decision taken.
Why Binance-FTX Deal Fell Through
As it stands, it looks like Binance has pulled out of the deal.
According to an unnamed source from Binance, the exchange is unable to support FTX’s customers with liquidity as it earlier promised. Binance is reportedly pulling out of the deal due to reports about mishandled customer funds and alleged US agency investigations into FTX.com.
While noting that retail consumers may suffer the fallout of the failed exchange, the source noted the ecosystem is becoming more resilient to better handle such fallout.
Where Is Bitcoin Headed?
As it stands, Bitcoin is in free fall and trading at $16,712, according to CoinMarketCap. A short-term squeeze is expected as institutional investors jump in to buy the dip. However, many are worried Bitcoin may test new lows after losing its support at $17k.
An analysis of the last two bitcoin bear cycles reveals that bitcoin dipped by 83% over a year in 2019 and 87% over 426 days in 2015. Already, Bitcoin has dipped by about 75% since its ATH in November. These two cycles suggest Bitcoin could floor at either $11,700 or $9000. Some others also believe Bitcoin will find support at $13,500.
Meanwhile, the FTX token (FTT) also fell as low as $2.06. Currently, there is a slight uptick in prices. However, the token is still down by 43% and trading at $2.84. As CZ previously noted, FTT will remain ‘highly volatile in the coming days as things develop.’
An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.
