The price of Bitcoin has once again fallen below the crucial $20,000 mark in the past few hours. The crash occurred around 12:00 pm EST amid concerns about whether the crypto market is in danger of another Terra Luna/ Celsius disaster.

Bitcoin investors seemingly responded with a risk-sell-off. According to analytics service Coinglass, $112.83 million worth of cryptocurrencies were liquidated in the last hour alone, a whopping 9% of which were long positions.

Bitcoin Contagion Fears Amid FTX Vs. Binance Feud

The market is on shaky ground due to the feud between two of the richest exchange bosses in the crypto world. Since Binance CEO Changpeng Zhao (“CZ”) announced that his exchange will sell its huge stack of FTT tokens, the token’s price is under tremendous pressure.

However, with the FTT token being a main pillar of the balance sheet of Sam Bankman-Fried’s FTX exchange, as a recent report revealed, there are also growing rumors that the exchange itself may be on the verge of insolvency.

As Bitcoin-analyst Dylan LeClair revealed, FTX’s stablecoin reserves are disappearing almost as fast as they are being replenished.

Massive impact on the Bitcoin market may also have been the fall of FTT token below the important $22 mark. After the price of FTT remained at around $22 for a long time, there was a sudden crash to as low as $15.03.

Just yesterday, Alameda CEO Caroline Ellison emphasized that her company would be happy to buy the token for $22 from CZ. Now that this important mark has fallen, LeClair expressed the suspicion that this could be the breaking point for FTX. The analyst tweeted:

I have a horrifying thought that the Alameda counterparty for the leveraged FTT exposure could be the solvency of FTX itself.

As $22 FTT fell, ~400k worth of FTT open interest was eviscerated. Who else is capitulating with size at exactly that level except Alameda?

However, besides the crash of the FTT token, there are other alarming red flags. For instance, some users are reporting that FTX is currently not processing any withdrawals or is delaying them.

withdrawals from ftx not going through…been an hour. will update

— degentrading (@hodlKRYPTONITE) November 8, 2022

Another burning question the crypto community is grappling with is where Bankman-Fried is getting the liquidity for FTX. Various on-chain analysts have shown that FTX does not draw its liquidity from a cold wallet, as is actually common for an exchange that keeps user funds safe, but from other exchanges.

In another development, Alameda may have sold 100 million of bybits exchange token BitDAO (BIT). The token’s price plummeted by 20% within an hour, while FTT also dropped by 20%.

The juicy detail about this is that Alameda Research converted 3.36 million FTT (1% of total volume) into 100 million BIT (1% of total volume) with ByBit in 2021. Both parties agreed that they will not sell the tokens within three years.

However, Bybit CEO Ben Zhou said a few hours ago that someone had broken the promise and sold 100 million BIT, and that they may have been deceived.

If Alameda did indeed sell its 100 million BIT, this behavior could indeed be a breach of Alameda’s obligations. This in turn could indicate serious liquidity issues for Alameda and FTX.

The BitDAO community has now created a proposal asking Alameda to provide the on-chain address of the tokens that were supposed not be sold for three years. If there is no response within 24 hours, the community will decide what to do with the 3.36 million FTT.

busy at the moment but that wasn’t us, will get you proof of funds when things calm down

— Caroline (@carolinecapital) November 8, 2022

Alameda CEO Caroline Ellison answered that the BitDAO community will get a proof of funds. Whether this will actually happen remains to be seen.