Should you buy FTT dip now? FTT price prediction and analysis

Following insolvency rumors, FTX’s FTT token tanked 40% to $15, along with SOL and other Alameda-backed altcoins. As the bank run unfolds, this may be a huge buying opportunity.

A leaked balance sheet from Alameda Research, FTX’s sister company, sparked rumors on Sunday that Sam Bankman-Fried’s crypto empire might be on the brink of insolvency. According to the document, a large part of Alameda’s holdings — precisely $5.82 billion out of $14.6 billion in total assets — is allocated to FTT, FTX’s native token.

Obviously, the crypto market started panicking — seeing an industry giant’s most net equity tied in a relatively illiquid altcoin printed out of thin air by its sister company clearly doesn’t look like effective risk management. And considering the fresh memories of Three Arrows Capital's collapse in June, which led to a multibillion-dollar cascade of liquidations, FTT investors and FTX users started dumping the token and exiting the platform. After all, it’s better to be safe than sorry — especially in crypto.

But the real storm was yet to come. On Monday, Binance’s CEO Changpeng “CZ” Zhao announced that his exchange plans to liquidate its FTT token holdings, citing "recent revelations that have come to light" — seemingly a reference to Alameda’s leaked financials.

As an early backer of FTX, Binance received roughly $2.1 billion in FTT and BNB as part of its exit from FTX equity in 2021. Now, Binance started offloading its FTT bags — a process that is likely to take a few months to complete due to low liquidity and challenging market conditions. Although CZ claimed that the token sale will be conducted to minimize the market impact on its price, FTT had since plummeted 40% to $15.

CZ maintained that his actions were not meant to hurt the rival, but it’s hard to ignore that FTX's troubles would benefit Binance.

“A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine,” SBF tweeted out to his followers, insisting that the platform has enough funds to process withdrawals normally. However, the bank run from FTX seems to have damaged its liquidity. According to Etherescan, the last outgoing transaction from FTX on Ethereum took place at 6:37 a.m. ET, and the spokesperson for the company hasn’t commented on the apparent halt of withdrawals yet.

Recently, SBF hinted at an upcoming airdrop for FTT holders by retweeting a tweet that suggested rewarding those who didn’t move funds off FTX — a move seen by many as desperate.

“The fact that SBF retweeted this, shows that maybe - just maybe - not everything is fine,” one Twitter user commented.

However, the chances that Alameda will become the Lehman of crypto are still slim. As many analysts pointed out, Alameda/FTX are incorporated entities, which means that, unlike Terra, they have access to TradFi line of credit.

“My view is that the crisis which FTX-Alameda is facing is not the alleged FTT collateralized loans on Alameda's books. It is the bank run that has ensued off the back of this rumor (which @cz_binance is happy to stoke),” Twitter personality Wassie wrote in a lengthy thread.

“Perhaps Alameda can put up more collateral. Perhaps it can negotiate an amendment and extension of the loans. It could even seek to re-finance the loans at a higher interest rate. Maybe these loans aren't even due... and therefore a default hasn't even happened yet!” they continued.

“FTT should remain volatile for some time. If, hypothetically, it were to trade down to $0 on forced selling (again, highly unlikely – most of it is locked), it would seem like bad risk/reward to bet that FTX relies on a positive EV for FTT to remain a going concern,” trading company Cumberland tweeted.