After several weeks of stability finally attained in the cryptocurrency market, the illusion of resilience has been shattered. With, BTC and ETH both experiencing a hard plummet overnight to 2020 levels, the wider market is in utter chaos with little clarity as to how far this descent will take the crypto-market. The trigger to initiate this panic seemingly links to the highly anticipated Binance-FTX deal, which turned sour earlier this week.
Highlights of the week
- The FTX acquisition move by Binance, which many anticipated to be a game-changing consolidation in the crypto-market ended up a flop when Binance decided to kill the deal. The management cited financial vulnerabilities, a looming bankruptcy, as well as ongoing investigations by federal agencies, after due diligence.
- In the panic that followed the FTX-Binance deal collapse, the prices of the top crypto names are in their worst free-fall seen in years. Bitcoin fell below $16,000, whereas Ethereum made it to a low below the $1,100 mark. The market experienced these prices back in 2020, and the market is eagerly attempting to make an upward climb back, in these conditions.
- The EU is on track to follow through with digital currency issuances seen in some of the top emerging economies in the prior months, including both China and India. The European Central Bank president, Christine Lagarde stated that a legislative proposal will move ahead in the coming months, to create a functioning framework for a digital Euro.
- With the US mid-term elections finally at a close, a report shows that the cryptocurrency industry had spent millions of dollars on lobbying industry-friendly political candidates. As the issue of tighter crypto regulations continues to be a hot topic in Congress, many are seeking to create room for legislative leeway. These lobby groups have been promoting an environment that could see a crypto-activity surge in a sustainable manner.
- Despite all of Elon Musk’s controversies since taking over Twitter, Dogecoin, which is increasingly assuming the role of a proxy for sentiment around the billionaire, continues to take on a soaring climb. One reason behind this market hype links to anticipations of dogecoin integration into the Twitter ecosystem, after several hints by Elon Musk himself.
Crypto fear & greed index
Following its improvement in the prior weeks, sentiment surrounding the wider crypto-sphere has also seen an excruciating plummet. The crypto fear & greed index slipped from 30 to 22, in a single day, indicating a downgrade from ‘fear’ back to ‘extreme fear’ once again. The reversal in market perception comes as Binance pulled out of its FTX acquisition deal, sending shockwaves across the market.
Bitcoin, Ethereum, and some of the top stablecoins dropped to multi-year lows overnight, which seemingly compounded the market fear in a domino effect. Traders were already on edge with regard to the market, following recent interest rate hikes. Recent developments, however, have caused serious concern about the safety and sustainability of crypto exchanges, along with the market in general.