The ongoing sell-off in the FTX Token (FTT) market is likely to worsen in the coming months due to a mix of pessimistic technical and fundamental indicators.
FTT May Plunge 30%
From a technical perspective, the FTT forms an inverted cup and handle pattern on the daily chart, identifiable by the crescent price trend followed by a less extreme up retracement.
On November 6th, the FTT broke below the pattern’s support line near $22.50, prompting a surge in trading volumes. FTX exchange token sell-off continued below the support line on Nov. 7, raising the risk of a bearish continuation phase in the coming months.
As a principle of technical analysis, an inverted cup and handle breakdown can push the price down by a length equal to the distance between the pattern’s support and the peak level. This brings the breakdown target price for FTT to around $16, a reduction of around 30% from the current price.
Changpeng “CZ” Zhao, CEO of crypto exchange Binance, says his company will liquidate its entire FTT holdings in the coming months due to concerns that the token will collapse like Terra did. A bearish technical setup was made (LUNA) May 2021.
Binance was an early investor in FTX.
Liquidating our FTT is just a post-exit risk management lesson learned from LUNA. We used to support each other, but after the divorce, we don’t pretend to love each other. We are not against anyone. However, we do not support those who lobby other industry players behind the scenes. to the next.
— CZ Binance (@cz_binance) November 6, 2022
Increased risk of sale, announcement continued About 23 million FTT tokens worth $530 million were sent to Binance in large numbers.
Yes this is part of it. https://t.co/TnMSqRTutr
— CZ Binance (@cz_binance) November 6, 2022
This also coincided with a surge in individual transactions worth over $100,000.
Alameda Research faces bankruptcy petition
Binance’s decision leaves Alameda Research, a crypto-focused hedge fund founded by FTX exchange’s Sam Bankman-Fried, insolvent due to exposure to less liquid altcoins, including FTT. It was inspired by the claim that it is possible.
Notably, Alameda Research had $14.6 billion on its balance sheet as of June 30, with FTT the largest holding at $5.8 billion. 88% of net worthIn addition, the company held $1.2 billion in Solana (SOL), $3.37 billion in unidentified cryptocurrencies, $2 billion in “stock securities,” and other assets.
Meanwhile, Alameda Research reportedly had $8 billion worth of debt, including $2.2 billion worth of loans backed by FTT. That, combined with the company’s alleged exposure to illiquid altcoins, has led some analysts to predict future bankruptcy.
“Alameda cannot cash most of the FTT to pay off its debt.” I have written Mike Burgersburg, Independent Market Analyst at Dirty Bubble Media Substack, said:
“There are very few buyers, and the biggest buyer seems to be the very company with which Alameda is most closely associated. […] In the event of a large sale, FTT’s fair market value can quickly approach $0. ”
Interestingly, on-chain data trackers was detected Alameda Research-affiliated wallets may send approximately $66 million worth of stablecoin tokens to FTX addresses on November 6, absorbing sell-side pressure on tokens.
damage control
Alameda Research CEO Caroline Ellison has refuted these claims, saying the company has more than $10 billion in assets and has paid off most of its loans as crypto credit markets tightened in 2022. I was.
A few notes on recent balance sheet information:
– That particular balance sheet is for a subset of our corporate entity and has over $10 billion in assets not reflected on it— Caroline (@carolinecapital) November 6, 2022
Bankman-Fried called the rumors “unsubstantiated” and assured supporters that FTX has audited financial information.
RELATED: FTX In Talks With Investors To Raise $1 Billion For Further Acquisitions
However, FTX traders appear to be taking a cautious route as the exchange’s stablecoin reserves have fallen by 95% over the past two weeks. As of November 7, FTX holds $26,141,000 worth of his USD-pegged tokens, his lowest in a year.
Meanwhile, investors are selling their FTT holdings at a loss amid the ongoing Alameda Research debacle. according to to Etherscan data.For example, a small whale reportedly took 65% loss on investment in FTT
Still, independent market analyst Satoshi Flipper sees a potential rally in the FTT price as it retests the long-standing support range seen in the weekly chart below.
“We are long at $22.95 because we have too much FUD,” says analyst I have written.
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