FTT tanks 28% as the FTX exchange struggles to process withdrawals

Key receivers

FTX's FTT token broke critical support at $21. The downward move was prompted by a lack of confidence in the FTX exchange. FTX users are worried about losing money by withdrawing their funds in bulk from the exchange.

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FTX's FTT exchange token has fallen to its lowest level since early 2021.

FTT Token Break Support

FTX is experiencing a bank run, and the FTT exchange token is suffering.

The leading crypto exchange hit a record low yesterday as bankruptcy fears intensified. Rumors that FTX might face financial trouble have weighed heavily on the FTT token, causing it to fall below the $21 support it has seen since early 2021. Recent reports also indicate that FTX is struggling to process crypto withdrawals, with no on-chain data available. It was done for about two hours on Tuesday afternoon.

In the last 24 hours, FTT's own spot market data on the FTX exchange has fallen by more than 28%. It hit a multi-year low of $15.40 before posting a small recovery on Tuesday morning. At the current price of $15.94, FTT is down more than 81% from its bull market peak of $84.18 on September 9, 2021.

The FTT selloff is largely due to a lack of confidence in the FTX exchange. Since November 5th, FTX users seem to have withdrawn large sums of money from the exchange due to fear of possible losses. According to Santiment data, FTX wallet balances have fallen by more than 90% due to the loss of trust in the exchange. Stablecoin balances are down sharply, with the exchange's reserves hitting a year-low of $51 million, a 93% drop over the past two weeks, according to CryptoQuant data.

Last week, a balance sheet release from Alameda Research raised concerns about the financial condition of an FTX-related business. The document indicated that Alameda held more than $14.6 billion in assets against $8 billion in debt. However, as most of these assets consist of highly illegitimate tokens such as FTT, SRM, MAPS, and OXY, it raises doubts as to whether Alameda will be able to repay its debt.

As FTX CEO Sam Bankman-Fried founded both Alameda Research and the FTX exchange, observers have long speculated that the pair are closely related. Bankman-Fried explained that the two companies are separate entities, but that doesn't seem to have convinced many FTX users. The current exit from FTX stems from fears that Alameda was using FTX's liquidity in its trading strategies. Now that the business appears to be running out of cash, FTX is worried that it may not hold enough cash in reserve to allow everyone to withdraw their money.

Editor‘Note: A previous publication incorrectly stated that Alameda Research owed $7.4 billion. The piece was updated to note that the company was $8 billion in debt, according to CoinDesk.November 2 report.

Disclosure: At the time of writing this piece, the author owned FTT, ETH and several other crypto assets.

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