FTX liquidity woes to impact Indian crypto exchanges

livemint.com:

NEW DELHI :

On Tuesday, Sam Bankman-Fried, chief executive of US cryptocurrency exchange FTX, tweeted that the company has reached a “strategic transaction" with Binance, under which the latter would acquire all non-US assets of FTX. The move, which Binance founder Changpeng Zhao detailed as a “non-binding letter of intent" to “help cover liquidity crunch", led to a crash in valuations of most of the prominent cryptocurrency tokens. Now, experts believe that the crash could further dent an already ailing cryptocurrency industry in India.

On Tuesday, FTT, the crypto token of FTX’s exchange, saw its value drop over 80% to as low as $3.77 at the end of Tuesday. While it has remained at around the same value through Wednesday, its crash echoed the drastic demise of stablecoin project Terra this May, which saw stablecoins linked to the Terra blockchain lose more than 99% of their valuations.

Ether, which started Tuesday at around $1,575, was trading at about $1,200 at 4 pm on Wednesday, dropping almost 24% within less than 48 hours.

BTC, the official token of the Bitcoin blockchain, dipped below $17,000 for the first time in two years on Wednesday—down nearly 18% from $20,660 at the start of Tuesday.

Most other tokens that are publicly traded in exchanges globally have declined similarly.

A spokesperson for homegrown web3 startup, CoinDCX, which also runs an exchange, said in a statement that the crash pulled global cryptocurrency valuation below $1 trillion after a run of around six weeks that saw BTC reclaim the $20,000 level and global valuation cross $1 trillion.

To be sure, at its peak of market valuation this February, the global cryptocurrency industry was valued at over $3 trillion.

“There will be some