Crypto markets had a rough weekend and that didn’t end on Monday morning as chaos continues in the industry. Not only are most cryptocurrencies down, but some that have bounced sharply over the last week have quickly come down to earth.
As of 11:30 a.m. ET, Solana (SOL -5.68%) is down 7.3% in the last 24 hours, Arweave (AR -4.21%) is down 7.1%, and Aptos (APT -6.84%) has fallen 8%. This is even after declining early in the weekend as some hype for these cryptocurrencies wore off.
Solana, Arweave, and Aptos have all benefited from some speculative trading in the last week. Solana jumped late last week after Alphabet‘s Google announced it is running a Solana validator and will add features for Solana developers and node runners. Arweave bounced when Meta announced an integration for its non-fungible token (NFT) efforts. And Aptos was the hot new token of the last month on the market, which may be fading. In all three cases, recent jumps in value are simply wearing off.
The other big news item for the entire crypto market is rumored liquidity issues at exchange FTX, which is run by Sam Bankman-Fried. Over the weekend, Binance CEO Changpeng Zhao said he would sell all of his FTX Tokens (FTT -1.74%) and there appears to be a battle going between the two founders. There’s been a rush of over $450 million in stablecoins out of FTX over the past week, which could potentially cause a run on the bank, or a liquidity crisis. What’s difficult is FTX isn’t public, so no one outside of the executives really knows the company’s financial situation.
Traders and investors only need to look back to June when Three Arrows Capital, Celsius, and Voyager became insolvent to see just how quickly crypto companies can go sideways. Bankman-Fried has said FTX has enough funds to pay for any customer withdrawals, but that’s all that’s known right now.
What’s odd about today’s move is the stock market is up slightly, so this is a crypto-specific drop in values, not the market overall moving out of risky assets.
It’s not surprising to see some of the recent pop in crypto values come down, so the volatility isn’t something I would worry about. But FTX is worth keeping an eye on.
Bankman-Fried not only owns FTX, but also has a trading company called Alameda Research, which has been a major borrower of funds in the crypto market and has been a huge trader over the last few years. Alameda is a major holder of FTT tokens, so there’s a major tie between the two.
If FTX becomes the next major crypto company to become insolvent it would have a widespread impact on the industry. Right now, Bankman-Fried is saying that won’t happen, but it’s worth understanding your risks if it does happen — after all, this summer’s crypto meltdown happened quickly.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Travis Hoium has positions in Alphabet (A shares) and Solana. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., and Solana. The Motley Fool recommends Arweave. The Motley Fool has a disclosure policy.