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FTT-Alameda Drama Weighs on Market as Asia Begins Its Week
FTT, SOL, and BNB all begin the week in the red as the market digests Alameda’s questionable financial position.
By Sam Reynolds
Updated Nov 7, 2022, 8:05 p.m. Published Nov 7, 2022, 5:14 a.m.
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Traders in Asia awoke to a market partially in the red as the digital assets industry continues to deal with the controversy over trading firm Alameda Research’s balance sheet.
FTX’s FTT exchange token, which makes up a significant amount of Alameda's assets, is down 5% on day as Binance’s CEO Changpeng Zhao publicly feuded with Alameda’s CEO Caroline Ellison about selling off Binance’s FTT holdings.
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Exchange balances of FTT are also surging, according to data provided by Glassnode. Typically, high exchange balances imply that there's a lot of liquidity for buying and selling tokens. This usually results in a downwards price trend as traders look to sell tokens.
Data from Nansen shows that FTX is suffering from a major spike in exchange outflows. During the last week approximately $292 million in stablecoins have left FTX. Traders could be departing the exchange over fears of liquidity issues, as Alameda is a large market maker on FTX.
Meanwhile, Solana, a token backed by Alameda and FTX, is down 11% on day. According to a copy of the Alameda balance sheet seen by CoinDesk, Alameda holds $292 million of “unlocked SOL,” $863 million of “locked SOL” and $41 million of “SOL collateral.”
Also caught in the market turmoil is Binance’s BNB token, which is down 4%.
Perhaps the fears of a full-blown liquidity crisis are overblown as market leaders bitcoin and ether (ETH) held steady. Bitcoin's implied volatility, or options traders' expectations for price turbulence over a specific period, continue to trend sideways, indicating little signs of panic.
The current CoinDesk Market Index is at 1,041. Bitcoin, the largest digital asset by market cap, is currently at $20,878, down 1.7% on day.
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Small investors are buying bitcoin. For a rally to succeed, the whales need to join in.
Small wallets have increased their BTC holdings by 2.5% since October's all-time high while large holders trimmed 0.8%, Santiment data shows.
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- Bitcoin wallets holding less than 0.1 BTC have increased their share of supply to the highest since mid-2024 even as the price holds around the mid-$60,000s.
- Larger holders with 10 to 10,000 bitcoins — the whales and sharks that typically drive major moves — have reduced their positions since the October peak.
- The divergence supports choppy, fragile price action because retail demand alone cannot sustain rallies when big wallets are distributing into every recovery.
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