Bitcoin prices fell to a two-year low on Wednesday morning as investors continued to struggle with an emergency deal reached between two of the biggest crypto exchanges, Binance and FTX.

Bitcoin hit $17,415 early Wednesday morning, the lowest point since November 2020, according to Coinmarketcap. It is down 10.8% in the past 24 hours, trading above $17,655.

The decline comes as the unexpected deal — far from being set in stone in a non-binding letter of intent — has raised fears among investors and analysts that FTX’s troubles could spill over into the crypto space. .

“FTX executive Sam Bankman-Fried was the white knight who saved businesses for most of this crypto winter,” Edward Moya, senior market analyst at Oanda, told Yahoo Finance on Tuesday. “Seeing one of the main cast members wave the white flag makes a lot of people nervous that more pain might come.”

Other cryptocurrencies also plunged.

The second largest cryptocurrency, Ether (ETH-USD) sold down 17% in the past day from $1,448 to $1,164. FTX Exchange Token FTT, fell 71% on the day from $17 to $3. It is now trading above $4.8.

The Solana (SOL) cryptocurrency, which FTX founder and CEO Sam Bankman-Fried has been heavily backed, has sold 28% in the past 24 hours from $28.19 to $20.

In the past 24 hours, the total market capitalization of all crypto assets has fallen by more than 10% from $980 billion to $880 billion, according to Coinmarketcap and Yahoo Finance charts.

Binance and FTX logos are seen in this illustration taken November 8, 2022. REUTERS/Dado Ruvic/Illustration

The deal marks one of the darkest days for crypto in a tough year for markets. It came as booming crypto trading platform FTX was facing a “significant liquidity crisis”, according to Binance CEO Changpeng Zhao in a tweet on Tuesday, forcing the rival exchange to temporarily suspend withdrawals. customers Tuesday morning.

“There’s a lot more concern that contagion risks and other liquidity issues are lurking,” Moya said.

Although Binance may still withdraw from the FTX deal, if the merger of the two biggest crypto players goes through, it could escalate business competition for other companies in the industry at a time when trading volumes have plummeted. according to analysts.

So far in 2022, total crypto trading volumes globally on exchanges have fallen 21% to $86 trillion, according to crypto indexing platform Nomics. During this period, Binance accounted for 21.7% of the total global crypto trading volume, while FTX holds a 3.96% share.

Coinbase Global Stocks (PIECE OF MONEY), a competitor of the two companies, closed down 11% on Tuesday from $54.50 to $50.83, even after Coinbase CEO Brian Armstrong said on Twitter that the company “has no material exposure to FTX or FTT (and no exposure to Alameda)”, and less competition would sound positive for the major exchange.

NEW YORK, NEW YORK - JUNE 23: Sam Bankman-Fried speaks onstage at the First Annual Moonlight Gala to benefit CARE - Children With Special Needs - hosted by Michael Cayre, Roy Nachum and MegaMoon Museum at Casa Cipriani on June 23 2022 in New York City.  (Photo by Craig Barritt/Getty Images for CARE For Special Children)

Sam Bankman-Fried speaks onstage at the First Annual Moonlight Gala to benefit CARE – Children With Special Needs – hosted by Michael Cayre, Roy Nachum and MegaMoon Museum at Casa Cipriani on June 23, 2022 in New York City. (Photo by Craig Barritt/Getty Images for CARE For Special Children)

Still, Mizuho Securities senior analyst Dan Dolev wrote in a note that “one crypto exchange’s rapid fall from grace shows just how fickle the crypto industry can be. red for COIN, where the vast majority of revenue comes from trading crypto tokens.”

Shares of Robinood (HOOD) also fell 19.3%. Bankman-Fried owns a 7.6% stake in the equity and crypto trading platform according to a May filing with the SEC.

However, Dolev played down the “reflex” reaction of the day, pointing out that unlike Coinbase, Robinhood derives only 12% of its revenue from crypto transactions.

As for the other companies involved, Pranav Kanade, portfolio manager at VanEck Digital Assets, told Yahoo Finance that the question remains whether FTX’s liquidity crunch was the result of a bad debt.

“You can argue that a lot of the leverage was taken out of the system in May and June of this year, but a lot of that was solved by FTX bailing out those companies to some extent,” said Kanade. “If there are bad debts, how many and who are these other entities?”

David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrency and stock markets. Follow him on Twitter at @DsHollers

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