Solana TVL Nosedives as FTX Crisis Unravels; Binance Scraps Acquisition Deal

Chart of the Day

U.S. stocks fell as a deepening crypto selloff and disappointing corporate earnings severely hampered risk appetite ahead of a key inflation report. With the uncertainty of the U.S. mid-term elections faded, investors are turning to Thursday’s inflation reading for clues on the path of the Federal Reserve’s policy tightening. 

Turmoil continues to unravel in the broader crypto markets after Binance walked away from the acquisition deal with FTX. Major cryptocurrencies tumbled with BTC retracing to below $16k, hitting the lowest level in two years, and ETH revisiting July’s lows. As of the time of writing, the largest cryptocurrency by market cap is changing hands above the $16.5k level, after shedding 9.67% of its market value in the last 24 hours. ETH follows a similar downward trajectory, plummeting 9.59% in the same period to reach the lower region of the $1,100 handle. Major altcoins are still submerged in a sea of red, with SOL leading the dive on a 26.86% loss in a similar time frame. The 7-day loss for the token is amounting to an unnerving 53%. 

Fundamentals are deteriorating alongside the token’s performance. Over the last three days, Solana's total value locked (TVL) is down more than 40%, nosediving from $1 billion to a little under $600 million. The Solana Blockchain has been heavily implicated by the FTX liquidity crisis, who together with Alameda Research is among the biggest patrons of the network. Solana validators are also set to unlock more than 50 million SOL tokens, around 13% of the circulating supply. This may compound existing woes as validators will likely rush to offload SOL and exit protocols. 

Talk of the Town 

Crypto Exchange Binance walked away from the FTX acquisition deal after discovering an insurmountable financial hole in FTX’s book. FTX CEO Sam Bankman-Fried informed investors that his company faced a shortfall of up to $8 billion, and needed at least $4 billion to remain solvent, according to Bloomberg. Without cash injections, the company would need to file for bankruptcy — the market has witnessed the failure of Celsius and Voyager, where billions in client money have been tied up in bankruptcy proceedings. In addition to financial strains, the liquidity crunch is drawing regulators’ attention as the SEC and CFTC are investigating whether the firm has mishandled customer funds, and looking closely into the opaque operations of Bankman-Fried’s crypto Empire.