Bitcoin drops to its lowest level in nearly two years; Solana drops another 30%

Cryptocurrencies came under pressure for a second day on Wednesday as the market digested the fallout from Binance’s planned bailout for FTX.

Bitcoin It made a new bear market low at $16924.68, according to Cowen’s metrics. The last drop was 5%, while Ether fell 10%, to $1,152.34.

The Solana symbol keep sliding. It was last down 30% after dropping 26.4% on Tuesday. Alameda Research, a trading company owned by Sam Bankman-Fried, who also operates FTX, was a big and early supporter of the Solana project.

“Market factors such as the provision of SOL token liquidity as well as support for Solana’s ecosystem projects on the FTX exchange have been an important driver of Solana’s success,” Bernstein’s Gautam Chhugani said in a note on Wednesday. “This is a detrimental event for Solana’s ecosystem in the short term. Furthermore, given FTX/Alameda’s balance sheet positioning, there may be near-term pressure on Solana’s holdings, as the situation improves.”

The cryptocurrency market rallied briefly on Tuesday after Bankman-Fried, aka SPF, announced that Binance would acquire its operations outside the United States but slumped shortly after.

The SBF empire quickly disintegrated after a report last week showed that a large portion of Alameda’s balance sheet was concentrated in the FTX token (FTT), the original token for the FTX trading platform. After some sparring on Twitter with SBF, Binance CEO Changpeng Zhao announced that his company is dumping FTT on its books, leading to a run on the popular FTX exchange and a liquidity crunch.

The FTSE fell 10% Wednesday, after dropping more than 75% the previous day.

The bombshell will likely set the crypto industry back, but to what extent remains to be seen. Analysts expect more regulatory scrutiny on offshore exchanges, where the majority of crypto derivatives trading takes place. It is also unclear how widespread the financial contagion will be in the rest of the market.

In addition, Bankman-Fried was recently hailed as the industry’s “white knight” as he came to the rescue of crypto service companies such as BlockFi and Voyager that almost didn’t survive the crypto contagion this spring.

For newcomers to the crypto market, he and FTX have become the faces of the industry, securing naming rights on the Miami Heat basketball court last year, bringing in Tom Brady and Gisele Bundchen as company ambassadors, and becoming major donors to Democrats. Policy.

“Given the publicly confrontational nature of FTX CEO Sam Bankman-Fried and the scale of FTX, we believe the events of the week could cause some loss of consumer confidence in the crypto industry, beyond that seen in the aftermath of the 3AC, Celsius, and Voyager events that occurred earlier. This year, “especially if the contagion persists and cryptocurrency prices continue to decline,” KBW analysts said in a note on Tuesday. “It may take time for customers to regain their confidence in the industry, in general (and we think regulation can help with that).”