Bitcoin prices down 75% from highs. Cryptocurrency crash explained

Crypto assets edged higher today continue to plummet after reports said that Binance has backed out of the FTX deal. Bitcoin on Wednesday plunged below $16,000 mark for the first time in two years and recently traded 3% higher at AT $16,351 while Ether was up 6.3% at $1,169. Bitcoin had reached a record high of almost $69,000 a year ago.

Cryptos had had already shed around $2 trillion in value before FTX’s troubles emerged this week as central banks around the world ratchet up interest rates to combat runaway inflation. 

Shivam Thakral, CEO of BuyUcoin, said: “The FTX collapse has wiped out over $180 billion from the crypto market as digital assets across the board are under tremendous selling pressure. In the altcoin space, MATIC, AVAX, and SOL witnessed a double-digit drop in their value due to the broader sell-off across crypto assets. As per the latest update, Binance has backed out of the deal to acquire FTX which is driving the investors away from riskier assets.”

“Feedback from retail/Institutional investors on withdrawals of their funds from FTX will play a crucial role for market recovery in the coming weeks,” he added.

Apart from FTX troubles, global risk sentiment has dampened a bit as selloff in crypto currencies continued, IFA Global said in a note. 

“Binance has walked away from taking over FTX and FTX has warned of bankruptcy without a $8 billion fund infusion. A poorer than expected show by the Republicans in the midterms too is hurting sentiment. Republicans are likely to take over control of House with a narrower margin than earlier expected and Senate race is still wide open,” the forex advisory added. 

Focus will be on the all important US October CPI print today. 

Among other asset classes, US equities snapped a three day rally overnight with S&P500 and Nasdaq ending with cuts of 2.1% and 2.5% respectively. Asian equities are trading with a negative bias.

Crude prices have dropped for the fourth straight session on recession concerns in US and as China COVID concerns continue to grow. EIA data showed a significant inventory build up as well and that too is weighing on Crude. Gold is steady around $1,708 per ounce. 

Meanwhile, Sequoia Capital wrote down the full value of its holdings in FTX, a signal the venture capital firm sees no clear path to recouping its investment in the embattled cryptocurrency exchange. The VC firm put in about $214 million last year in FTX’s international and US businesses, Sequoia told its investors Wednesday. The writedown includes holdings of both FTX.com and FTX.us, said a spokeswoman for the firm. (With Agency Inputs)