FTX Risks a 30% Decline in Token Price
The present selloff in FTT (the digital token of the crypto exchange named FTX) could deteriorate in the next months due to negative fundamental and technical indicators. From a technical viewpoint, on the regular chart, FTT has created an unusual pattern, denoted by its price trend moving in a crescent shape and then witnessing a less rising retracement. On the 6th of November, the token fell lower than the support line of the pattern close to $22.50, supplemented on the behalf of a volume spike.
A 30% Drop Expected in FTX Token (FTT) Price
The selloff of the FTX exchange’s token continued on the 7th of November lower than the support line. This ignited the hazards of a continued bearish trend in the next months. As included in the technical analysis, the above-mentioned breakdown of the token can thrust down the length in line with the distance between the peak and support level of the pattern. With this, the target of the breakdown price is placed at approximately $16, up to 30% down as compared with the present price.
The bearish technical management occurs as the CEO of Binance, Changpeng Zhao, stated his platform would assist in the liquidation of the whole FTT holdings during the next months. This move was taken while fearing that FTT might crash just like Terra (LUNA) did in May of the previous year. Binance became one of the early investors in the crypto exchange FTX. Binance’s decision of liquidation was influenced by the accusations raised against Alameda Research (considered a crypto-centered hedge fund established on the behalf of Sam Bankman-Fried’s FTX).
Alameda Research Goes through Insolvency Accusations
As per the allegations, Alameda Research could become insolvent due to its exposure to FTT as well as the rest of the illiquid altcoins. It is noteworthy that on the balance sheet of Alameda Research there had been $14.6B as of the 30th of June. In that amount, the biggest proportion was held by FTT at $5.8B (denoting approximately 88% of the net equity).
Apart from that, the company held almost $2B in equity securities as well as the rest of its assets. On the contrary, the liabilities of up to $8B worth had been reportedly kept by Alameda, Research, taking into account $2.2B in FTT collateralized loans. That, in addition to the alleged exposure of the company to the altcoins which were illiquid, led a few analysts to anticipate that its insolvency was near.
