Crypto Collapse: Why Bitcoin And Ethereum Are Crashing

The two largest cryptocurrencies, Bitcoin BTC/USD and Ethereum ETH/USD, are crashing Tuesday afternoon as FTT FTT/USD, the native token of cryptocurrency exchange FTX, collapses.

What Happened: Speculation surrounding FTX started last week following reports that a significant portion of Alameda Research's balance sheet consisted of FTT. Alameda is FTX CEO Sam Bankman-Fried's trading firm. The crypto market has since grown concerned about FTX's liquidity. 

The FTX native token began facing significant selling pressure after Binance CEO Changpeng Zhao said he would offload his FTT holdings on FTX.

Zhao noted that he planned to liquidate his holdings over "recent revelations that have come to light," saying he wouldn't support people who "lobby" against other industry players behind their backs.

In a turn of events Tuesday, Binance agreed to buy FTX. 

"Things have come full circle, and FTX.com's first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.)," Bankman-Fried said via tweet.

The Binance CEO also took to Twitter to confirm the deal, noting the two exchanges signed a non-binding letter of intent.

"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 FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days," Zhao said via tweet.

Related Link: The FTT Debacle: Want To Cash In? Here's What Experts Said After Binance Selloff

$BTC, $ETH Price Action: At publication time, Bitcoin was down 15.3% over a 24-hour period and Ethereum was down 17.81%, according to Benzinga Pro. The FTX token was down more than 85%.

Photo: Tumisu from Pixabay.