Before i jump into this crazy event that occurred today, I need to explain what Exchange liquidity means. Liquidity is a term used in the financial world to refer to how easily you can sell something and, in most cases, convert it into cash. Liquidity crises can occur in the crypto exchanges when everyone is trying to sell an asset and there is not enough capital to cover the sell. It’s like a run on the Bank
“Liquidity Crunch” issues continue to haunt the crypto market. It’s scary to think that FTX which is one of the largest Crypto Exchanges has been bitten by that liquidity concerns. Yes. Binance, the biggest rival for FTX is buying it. Looks like hours after Bankman-Fried(CEO of FTX) said there were no issues, the world seems to have turned on him. He called Binance for help. Binance is buying FTX due to a panic situation driven by the concern that FTX’s cryptocurrency exchange might not survive. This is a significant event in the retail crypto markets. While is easy to measure retail confidence in terms of coin prices, its much worse. Events like these shake retail investors to its core and give life to all those who have been demanding that the Fed to regulate these firms better. A demand that seems to opposite to the very sentiments that have made crypto currencies so popular