Bitcoin Falls Below $17K, First Time in 23 Months, as Binance Said to Waver on FTX Deal

Jun 13, 2023

Bitcoin (BTC) dropped to a new 23-month low on Wednesday as crypto traders processed the news that the Binance exchange might demur on an earlier plan to buy its once-mighty but suddenly ailing rival FTX.

The price of bitcoin hit $16,936 on crypto exchange Bitstamp on Wednesday, after CoinDesk reported that Binance is leaning toward scrapping the deal after a first glance at FTX's books. As of press time the BTC price had popped back up to $17,254, but still down 14% over the past 24 hours.

The swift downward move in bitcoin quickly reverberated in traditional markets, where the ProShares Bitcoin Strategy ETF (BITO) briefly halted transactions on Wednesday as the underlying BTC futures on the Chicago Mercantile Exchange (CME) plunged, in turn triggering a stock-exchange circuit breaker on the ETF.

Trading quickly resumed but the incident showed the sudden viciousness that has reappeared in crypto markets following months of seemingly rangebound trading in bitcoin around $20,000.

Read More: Crypto Exchanges Scramble to Compile 'Proof-of-Reserves' as FTX Contagion Grips Markets

"This is another one of those catalysts," said Bob Iaccino, Path Trading Partners co-founder and chief market strategist. "I wouldn't be surprised if bitcoin went as low as $9,000, which for me, as someone who got out of bitcoin and is waiting to get in again, would actually be a positive."

Binance on Tuesday said it would buy the billionaire Sam Bankman-Fried's FTX after what appeared to be a severe run on deposits.

CoinDesk reported previously that the balance sheet of Alameda Research, also under Bankman-Fried's control, was heavily weighted toward the FTX exchange's own token, FTT – signaling billions of dollars of exposure for which there might not be ample buyers, and thus prone to steep losses in the event of a sell-off.

Read More: 'Long' Crypto Traders Take on $700M in Losses as Markets Falls on FTX Contagion Fears

Binance described its initial agreement as a non-binding letter of intent, and executives said the deal would be subject to due diligence.

"I still believe crypto is here to stay but these things need to clean out before you can do serious investments in the space, especially from a traditional finance perspective," Iaccino said.

UPDATE (Nov. 9, 4:48 UTC): Added quotes by Bob Iaccino, Path Trading Partners co-founder and chief market strategist.

UPDATE (Nov. 9, 8:15 UTC): Add information about BITO.

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