Bitcoin Prices Plunge to a Yearly Low After FTX’s Failure. What Happens Next.

Bitcoin prices plunged to a yearly low following the announced rescue of FTX by rival Binance.

Rutmer Visser/Dreamstime

and other cryptocurrencies plunged on Wednesday as fear swept the digital asset market in the wake of the failure of FTX, one of the largest exchanges.

The price of Bitcoin has tumbled more than 10% over the past 24 hours to $17,600, a new yearly low, having previously traded above $20,500 on Tuesday before it was announced that rival exchange Binance would rescue imperiled FTX.

Bitcoin’s latest move puts it significantly short of a trading range of $19,000 to $20,000 that had largely held for the last two months. The largest cryptocurrency dropped close to the $17,300 in the trough of recent selling, which is well below the previously yearly low of $17,629 marked in June.

“Nervy days ahead for cryptos,” said Craig Erlam, an analyst at broker Oanda. “Cryptocurrencies have been pummeled at the start of the week with Bitcoin down almost 20% in two days at one stage amid concerns over FTX.”

Cryptos have proven to be largely correlated to other risk-sensitive assets like stocks amid 2022’s tough macro backdrop of high inflation, rising interest rates, and recession risks. While the
Dow Jones Industrial Average
S&P 500
were poised for losses Wednesday, investors in the stock market were watching the U.S. midterm election results as the drama in digital assets unfolded separately.

Beyond Bitcoin, it was a sea of red.
—the second-largest digital asset—retreated 19% to $1,200. Smaller cryptos or altcoins were unspared, with
collapsing 35% and
21% lower. FTT, the token used on the FTX exchange, crashed 75%. Memecoins were no better, with
Shiba Inu
dropping 19% and 12%, respectively.

Write to Jack Denton at jack.denton@barrons.com

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