In the early morning of November 9th, the "Binance vs. FTX" drama reached its climax. CZ and SBF simultaneously issued a document announcing that Binance would acquire FTX wholly (see"The epic reversal of the plot, CZ announced that it will completely acquire FTX"), affected by this news, not only the FTT price was greatly repaired, but the market as a whole also ushered in a rapid rebound.
However, the good times did not last long. Just when everyone thought that this matter would be settled, the market once again heard the sound of acquisitions or being forced to stop due to violations of anti-monopoly laws. The market took a sharp turn for a while, and BTC once fell below 17,000 The U.S. dollar and ETH once fell below $1,300. As SBF personally admitted that FTX was suffering from a liquidity crunch, FTT collapsed directly, falling as low as around $2.5.
Looking back at the past two days, since CZ tweeted on the evening of November 6 that he would liquidate all the FTT on the account, the news of this war has become the most important factor affecting the short-term trend of the cryptocurrency market. From the perspective of the stage, It can be roughly divided into six periods with different emotions.
Stage 1: Before CZ tweets "Clear FTT"（before 23:47 on November 6)
Before the war started, the broader market was in the middle of a long-lost small rebound. After several months of downturns and sideways trading, the panic has gradually been digested, and many investors initially had better expectations for the market in November.
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Phase 2: After CZ tweets, before Caroline responds(11/6 23:47 - 11/7 0:03)
On the evening of November 6th, CZ tweeted the battle that was destined to go down in the history of cryptocurrency - "As part of Binance's withdrawal of FTX stake last year, Binance received approximately $2.1 billion in cryptocurrency equivalent (BUSD and FTT). Due to the recent exposure, we have decided to liquidate all remaining FTT on the account. We will try to do this in a manner that will have the least impact on the market. Due to market conditions and limited liquidity, we expect this will It will take months to complete."
Affected by this, FTT fell rapidly in the short term, once falling to $21.4. However, at the time, other mainstream cryptocurrencies including BTC and ETH were not affected much.
Phase 3: Caroline's response and 35 hours aftertext
The first drop in FTT didn’t last long, and after CZ tweeted, Caroline Ellison, co-CEO of Alameda Research, responded quickly: “Alameda would be happy to buy all FTT from you (CZ) for $22” .
Such a strong "underpinning" declaration (it seems a bit embarrassing now) effectively stabilized the decline of FTT. In the next 35 hours, the price of FTT has been stable above $22.
Stage 4: After FTT falls below $22, before the acquisition announcement(November 8th 11:00 - November 9th 0:03)
The underpinning effect of Alameda only lasted about 35 hours or so.
As the market's concerns about the overall liquidity of FTX intensified, a large number of users began to withdraw cash from FTX frantically. In the face of the sudden squeeze, bad signals such as the delay of FTX withdrawals soon appeared, which seemed to confirm the market's doubts about the existence of a gap in the exchange's liquidity.
At around 11:00 on November 8, the panic that continued to pile up and ferment finally ushered in an outbreak. FTT quickly dived after falling below the $22 mark, and once fell to around $15. This time, the broader market also began to turn weak. BTC fell below the $20,000 mark, ETH fell below the $1,500 mark, and more altcoins also experienced double-digit declines. Projects involved in FTX, such as SOL and BIT, fell even more. More than 20%, the stable currency MIM with FTT as one of the main collateral assets also showed signs of unanchoring.
Stage 5: The announcement of the acquisition and the half hour thereafter(0:03 on November 9th - around 0:30 on November 9th)
The climax of the battle came in the early morning of November 9th. As mentioned above, CZ and SBF announced at the same time this morning that Binance will acquire FTX wholly. Stimulated by this super reversal, BNB once rose to $398, with a maximum increase of more than 20% in one hour; FTT once rebounded from $14.5 to $21.2, with a maximum increase of 46%; BTC and ETH also returned to 20,000 and 1,500 Wait for the top of the pass.
It seems that everything is moving in the ideal direction, but the reality is often cruel.
Stage 6: After the rumors that "acquisition may be blocked" flow out(November 9 0:30 - now)
Shortly after CZ and SBF announced the acquisition plan at the same time, there were voices in the market that the acquisition might be put on hold due to regulation.
Thibault Schrepel, an associate professor at the University of Amsterdam who specializes in blockchain and antitrust issues, wrote under CZ's tweet: "In the future please check whether this complies with antitrust laws before tweeting, if this tweet appears in an upcoming I wouldn't be surprised by an antitrust lawsuit."
Thibault explained that in the U.S., where antitrust laws such as the Sherman Act prohibit direct competitors from taking action to protect each other, CZ tweeted that “after FTX faced a severe liquidity crunch and sought help, he has Stepping in to protect users” means there was an illegal agreement and U.S. law would likely apply to the incident, as the transaction affects the entire company, including its U.S. operations.
At the same time, Steven Adamske, spokesman for the US Commodity Futures Trading Commission (CFTC), also said that the CFTC is paying attention to the development of the FTX incident, but no regulatory issues are currently clear.
Affected by this uncertainty, market sentiment took a turn for the worse again. BTC once fell below $17,000, and ETH also fell below $1,300. Due to the admission in the acquisition announcement that there is a liquidity crunch in FTX, FTT collapsed directly, falling as low as $2.5 at one point (temporarily reported at $5.8 as of the publication), and was directly wiped out by a zero.
What's next?
This morning, SBF published another letter of apology stating that the details of Binance’s non-binding agreement to acquire FTX are still under discussion.
In addition, FTX US also issued an announcement explaining that it is an entity that is completely independent of FTX operations. This can be seen as FTX US clarifying that it has not experienced a similar liquidity crisis, and it can also be understood as a sideways response to the acquisition and US users are not affected.
It is worth mentioning that the incident does not seem to have all negative effects. At least it has accelerated the disclosure process of the exchange industry on its own asset reserves. Both Binance and OKX have stated that they will announce their reserve certificates in the future .
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