The dramatic takeover of FTX, formerly the world’s second-largest digital asset exchange, by its dominant rival Binance, has caused heavy losses across the entire cryptocurrency market, just as things were starting to appear stable.
Apparently stability can only last so long, and the consolidation carved a US$130bn wound, causing global market capitalisation to drop below US$880bn; the lowest the markets have been in at least three months.
At the top end of the market Ethereum was the worst hit, having dipped around 15% this Wednesday.
Currently changing hands at US$1,220, ether could test the US$1,150 support line should the market continue to move in a downward direction.
Bitcoin is hardly responding well to the volatility, having fallen to an intraday low of US$16,900 before the bulls brought the coin back to a slightly better position of US$17,600.
Bitcoin cedes recent gains following major shake-up of crypto exchange sector – Source: currency.com
It’s an unfortunate circumstance for bitcoin, which was been bolstered by strong price action in recent weeks.
Bitcoin has evidence of support at the US$17,000 price point, when it last saw a severe dip way back in June.
It comes as no surprise that FTX Token (FTT) suffered major harm. The exchange's token lost over 80% of its value in the intraday trade, bringing its market cap down to US$615mln.
But at the time of writing, FTT has recovered to US$625mln as investors come to realise that FTX at least has a futurte under the stern watch of Binance head Changpeng 'CZ' Zhao.
Among the network tokens, Solana (SOL) sustained heavy 35% losses, while Algorand (ALGO), Polygon (MATIC) lost upwards of 20%.
Cardano (ADA) and Polkadot (DOT) have so far managed to contain losses in the single digits.
One network to actually add value in the morning trade was Tron (TRX), which rose 2.4% to bring its market cap up to US$5.7bn, though it has since retraced slightly.
As for the meme coins, Dogecoin (DOGE) and Shiba Inu (SHIB) both lost around 8%.
Things are not looking too bright in the decentralised finance (DeFi) space either.
Lido DAO (LDO) was the worst hit, with over 20% carved out of its market cap, while Curve (CRV) and Synthetix (SNX) fared little better.
At US$48.86bn, total value locked across the whole DeFi space is now 10% less compared to this time last week.
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