Bitcoin Price Drops Below $16,000 As Binance Kills FTX Deal

Bitcoin Price Drops Below $16,000 As Binance Kills FTX Deal 

A day after its brief return above $20,000 on Tuesday, bitcoin fell below $16,000 while ether reached its lowest point in four months. 

Crypto and stocks extended their decline on Wednesday as investors kept an eye on mid-term election results and updates on canceled plans for Binance to buy FTX.

A day after its return was short of $20,000 on Tuesday, bitcoin fell below $16,000, trading down 14% as of 4:45 p.m. ET. Ether followed and fell to its lowest price since July, holding firm at the $1,100 level on Wednesday afternoon. Almost two months after the meltdown, ether turned upside down on Wednesday as supply dwindled due to increased demand for trading and rising gas prices. The decrease is not a surprise to analysts, who said that the change should be expected given the uncertainty that FTX is strong in the legal situation, as well as the fear that the bailout of Binance, which was previously accepted, does not happen.

FTX's future is uncertain as Binance goes cold 

As some predicted, Binance backtracked on its previous promise, tweeting on Wednesday afternoon that it would not pursue the FTX acquisition. Stefan Rust, CEO of the immersive web technology agency Laguna Labs, said on Tuesday that he thinks it is "impossible" that Binance's acquisition of FTX will come true, adding that Binance CEO, Changpeng Zhao, "trying to stop the blood flow." 

Sam Dibble, a partner at law firm Baker Botts, also questioned whether the deal would go through. He told Blockworks on Wednesday — before Binance said it would no longer pursue acquisitions — that he viewed the company's move as "an attempt to boost market confidence." 

Dibble has said the secured deal could turn into more of a financial deal. 

"Binance can say, 'Well, we were thinking about acquiring that company, but it turns out that what we really want is assets, not wages,'"he said. “These types of changes in structure of a deal happen all the time in [mergers and acquisitions] when you have a non-binding term sheet like this.” 

"I think the perception is around the size of the hole in FTX's balance sheet, and maybe any subsequent liquidation will be a bloodbath in crypto," said Matt Fiebach, research analyst at Blockworks. Stocks join crypto in sharp decline ahead of Thursday's CPI release 

Apart from the killing of crypto, stocks fell. Indices S&P 500 and Nasdaq Composite closed up 2.1% and 2.5% respectively. The future of the federal funds rate, which the chairman of the Federal Reserve Jerome Powell predicted could hit 5%, is uncertain, along with the results of the elections that continue to run after the end, those who the market is nervous. Meanwhile, the dollar index (DXY) rose 0.75%, reversing Tuesday's decline. "The current situation reflects a slight improvement in the sense that the increase in yields worldwide is no longer putting pressure on equity," said Tom Essaye, founder of Sevens Report Research. "But that's the only bright spot we've seen in the last month."

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