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What Do We Think About the Future of FTX Now That Binance’s CEO Sold Off $500 Million Worth of Tokens?

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FTX Price Prediction as Binance CEO Dumps $500 Million Token Holdings – Can FTT Recover?

After Binance said it will sell off all of its FTX (FTT) holdings, the price of FTX (FTT) dropped by 3% in the previous 24 hours. The move was made by Binance after it was revealed that Alameda Research, owner of the competing FTX trading platform, has approximately 40% of its assets in the exchange utility token.

As a result of the news, FTT has down by 12% in the last week and is down 73% from its all-time high of $84.18 in September of last year. With mounting doubts about the marketability of FTX’s assets, FTT might see additional declines in the days and weeks ahead.

The Future of FTX After Binance’s CEO Sells $500 Million Worth of Tokens: Can FTT Recover?

On the FTT graph, the currency is clearly losing value. In particular, it has seen severe selling pressure and a significant loss of momentum, as shown by a plummet in the relative strength index (purple) from above 65 a few days ago to 40 today.

Its 30-day moving average (red) is also now declining in comparison to its 200-day moving average (blue). A reversal is warranted at this time since it has been steadily falling below its long-term average.

On the other hand, FTT isn’t exactly in a typical situation right now. This is due to the aforementioned increase in rumors about the financial stability of both its parent exchange, FTX, and the firm that controls FTX, Alameda Research.

The financial health of Alameda may have been exposed by stolen papers late last week. While Alameda had $14.6 billion in assets and $8 billion in liabilities, it was swiftly pointed out by observers and commenters that $9.19 billion (or 63%) of its assets were locked up in illiquid cryptocurrencies, making it difficult to sell them in a pinch.

This news sparked widespread suspicion about Alameda and its financial health, despite CEO Caroline Ellison’s rebuttal that the leaked balance sheet only included a “subset” of the company’s assets.

The price of FTT looked to stabilize as a result, but the exchange’s decision to sell its reserves has made matters much worse. It has FTT worth more than $500 million, and that sum is almost certainly understated.

Binance’s action is harmful not just because it will put significant selling pressure on FTT, but also because it suggests that Binance has major questions surrounding the financial feasibility of FTX and Alameda. Binance’s CZ attempted to draw parallels between FTT and FTX and Terra, which saw a stunning collapse in May of this year, in a following tweet.

Therefore, the outlook for FTT is not promising. Its recent price performance is negative, with a 12% drop in value over the previous week and a 63% drop over the past year.

Furthermore, despite the fact that FTX is still one of the largest cryptocurrency exchanges in the world, negative speculation has the potential to become a self-fulfilling prophesy. If even a small number of the exchange’s largest holdings start to worry that the market is unstable, it will become unstable.

Keep in mind that a significant portion of Alameda’s assets are held in FTT, meaning that if the price of FTT drops, the firm may have a very difficult time paying down its obligations. Thus, this would lead to still more issues, and so on.

It’s not hard to see how this may snowball into an infinite cycle. The longer-term outlook for FTT and FTX is now uncertain. However, given that the market is still experiencing a slump, it is possible that both the exchange and its native utility token may face challenging conditions in the future.

This makes it more likely that FTT will continue falling rather than aggressively rallying in the foreseeable future.

Compiled by Coinbold

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