FTT falls 28% as FTX exchange struggles to process withdrawals.

FTX’s FTT exchange token fell to its lowest level since early 2021.

FTT token breaks support

FTX undergoes “a banking attack“, and its FTT exchange token is suffering. The leading crypto-currency exchange saw record outflows yesterday as insolvency fears intensify. Rumors that FTX may be facing financial difficulties have weighed on its FTT token, causing it to fall below the $21 support held since early 2021. Recent reports also suggest that FTX is struggling to process crypto-currency withdrawals, with data on the blockchain revealing that no withdrawals were made during a two-hour period Tuesday afternoon.

https://t.co/AuwZPA8WXZ

– db (@tier10k) November 8, 2022

Over the past 24 hours, FTT has fallen more than 28% according to FTX exchange spot market data. It hit a multi-year low of $15.40 early Tuesday morning before showing a slight recovery. At its current value of $15.94, FTT is down more than 81% from its bull market high of $84.18, which was reached on September 9, 2021.

😮 In just two days, the amount of #Ethereum held in #FTX‘s main wallet has dropped from 322k to 32k. At one point, the wallet was bleeding 500 $ETH per minute. With the ongoing feud between @SBF_FTX and @cz_binance, expect continued unpredictability. https://t.co/vILMoySIEu pic.twitter.com/ROQt7wxj0c

– Santiment (@santimentfeed) November 7, 2022

The collapse of FTT is largely due to a sharp loss of confidence in the FTX exchange. Since November 5, FTX users appear to have withdrawn considerable amounts of money from the exchange, fearing that it may be bankrupt. According to data from Santiment balances on ETH FTX wallets fell by more than 90% as confidence in the exchange wavered. Stablecoin balances also saw a sharp drop, with CryptoQuant data revealing that the exchange’s reserves hit an annual low of $51 million, a 93 percent drop over the past two weeks.

Last week, a leaked balance sheet from Alameda Research raised concerns about the FTX-affiliated trading firm’s financial condition. The document revealed that Alameda held more than $14.6 billion in assets against $7.4 billion in liabilities. However, since most of these assets were made up of highly liquid tokens such as FTT, SRM, MAPS and OXY, it is doubtful that Alameda could pay off its debts.

Because FTX CEO Sam Bankman-Fried founded both Alameda Research and the FTX exchange, observers have long speculated that the pair were intimately connected. Bankman-Fried has maintained that the two companies are separate entities, but that doesn’t seem to have convinced many FTX users. The current exodus from FTX stems from concerns that Alameda used FTX’s liquidity in its trading strategies. Now that the trading company appears to have exhausted its liquidity, customers are concerned that FTX does not have enough funds on hand for everyone to withdraw their funds.