First Mover Asia: Prediction Markets Split if Binance Will Pull Out of FTX Deal; Bitcoin Drops 11%

Good morning. Here’s what’s happening:

Prices: Bitcoin, ether and other major cryptos plummet on a turbulent day in digital asset markets.

Insights: Prediction markets are split whether Binance will follow through on its proposed acquisition of FTX.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover,our daily newsletter putting the latest moves in crypto markets in context.

Crypto Prices Plunge on Turbulent Day

By James Rubin

As earthquakes go, FTX’s liquidity issues and proposed acquisition by Binance on Tuesday fell somewhere in the mid range – moderate damage to the industry’s reputation and price declines that sent bitcoin and other major cryptos back to mid October levels.

Bitcoin was recently trading at about $18,400, a more than 11% decline over the last 24 hours. The largest cryptocurrency by market capitalization last fell below $19,000 on Oct. 21. Ether was recently changing hands a little above $1,300, off more than 16% from Monday, same time. Other major altcoins sank by double digits to cap a turbulent day that saw crypto markets sink immediately following the Binance/FTX announcement, rise hopefully and then sink again as investors absorbed the rapid decline of one of the crypto industry’s leading lights.

A version of this article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today’s crypto markets. Subscribe to get it in your inbox every day.

FTX’s FTT token was trading at just below $6, a 74% decline during the past 24 hours. Solana’s SOL, which had tumbled Monday on speculation that Bankman-Fried’s trading firm, Alameda Research, might have to dump some of its holdings in a bid to raise liquidity, was off nearly 22%. Binance’s BNB token outperformed the market, but was still down about 4%.

The CoinDesk Market Index, a broad-based index designed to measure the market capitalization weighted performance of the digital asset market, recently fell just 0.5% but was down over 10% at one point.

“The FTT token will find it very hard if not impossible to recover while SOL and ecosystem tokens are likely to suffer losses too as trust appears to be eroded entirely,” wrote Joe DiPasquale, CEO of crypto fund manager BitBull Capital, in an email to CoinDesk, although he noted optimistically that “we don’t “expect bitcoin to face an extreme scenario. In fact, it could see increased inflows as market participants withdraw from riskier assets.”

“Either way, the sooner this gets resolved the better it is for the space, especially as it is likely to draw more attention from regulators,” DiPasquale wrote.

As U.S. voters went to the polls for midterm elections, stocks continued their momentum from Monday as the tech-heavy Nasdaq and S&P 500 rose a few fractions of a percentage point, while the the Dow Jones Industrial Average (DJIA) was up 1%. Safe haven gold also had another upbeat day, climbing 2.2%.

In an email, Marieke Fament, CEO of the NEAR Foundation, called said that “consolidation is inevitable in crypto’s current bear market,” but also saw FTX’s problems and the proposed acquisition as a potential learning experience.

“There’s nowhere to hide during crypto winter – and developments such as the acquisition of FTX by Binance underscores the challenges and lack of transparency behind the scenes of some key players -which undermine the reputation of crypto,” Fament said. “Moving forward, the ecosystem is going to learn from these mistakes and hopefully create a stronger sector that puts honesty, transparency and consumer protection at the heart of their businesses.”

Prediction Markets Split on Whether Binance Will Follow Through on FTX Deal

By Sam Reynolds

FTX and Binance shocked the crypto market on Tuesday by announcing that the former would sell itself to the latter. Sam Bankman-Fried, once thought of as the ‘Warren Buffet’ of crypto, is set to vanish from his throne.

But will the deal go through? Right now, it’s only a non-binding letter of intent that is subject to Binance’s due diligence. The market, however, is giving it an almost even chance of failing.

Investors on PolyMarket think there’s a 45% chance that Binance will pull out of the FTX deal and a 55% chance the deal goes through. Granted, the volume is small at $573 so the sample size is not large.

PolyMarket ran similar contracts about the Elon Musk-Twitter takeover deal, asking if Musk would be the CEO of Twitter by Nov. 30. Given how much drama was involved in the deal, with Musk attempting to pull out of it, it looked like the “no” side was all but certain to win. Then things changed.

Remember that Binance’s deal for FTX doesn’t include Alameda Research, the market maker and investment fund which kicked off this crisis. So maybe the exchange will sail through due diligence, or maybe there are a few more skeletons in the closet.

9:30 a.m.HKT/SGT(1:30 UTC) China Consumer Price Index (YoY/Oct)

Sharm El-Sheikh UN Climate Change Conference 2022 (Egypt)

TOKEN2049 (London)

In case you missed it, here is the most recent episode of “Money Reimagined” on CoinDesk TV:

Blockchains, the Solution to Climate Change Concerns, From Nearcon 2022

“Money Reimagined,” hosts Michael Casey and Sheila Warren were together again at Nearcon 2022. They spoke with Marc Johnson, an environmental solutions architect for Protocol Labs, and Fred Fournier, CEO of Open Forest Protocol, about blockchain sustainability and the data needed to combat the concerns of climate change.

FTX Agrees to Sell Itself to Rival Binance Amid Liquidity Scare at Crypto Exchange: The two crypto exchange giants signed a a non-binding letter of intent, Binance CEO Changpeng “CZ” Zhao confirmed on Twitter.

Yuga Labs, Circle, SkyBridge Among Investments FTX Ventures Made Prior to Liquidity Issues: FTX Ventures invested in some of the biggest names in crypto. Meanwhile, TradFi giants such as Tiger Global participated in FTX’s funding rounds.

FTX’s Push for US Crypto Clearing Left In Suspense By Binance Deal:The fate of FTX U.S. Derivatives’ application for the authority to clear customers’ crypto transactions – a potential game changer in U.S. markets – is now unclear.

FTX Exchange Halts All Crypto Withdrawals:Customer withdrawals that were previously processing but backlogged have been halted altogether, according to an announcement in the FTX Support Telegram group.

‘Pharma Bro’ Martin Shkreli to LUNA’s Do Kwon: ‘Jail Is Not That Bad’:The crypto villians discussed the impending FTX-Binance deal on the UpOnly podcast on Tuesday.