Why did the ETH price go down?

• FTX collapse

  On November 6, the CEO of Binance, Changpeng Zhao (CZ) tweeted that he was planning to sell off Binance’s native tokens of FTX called FTT. He did this because “recent revelations that have came to light,” referring to the Nov. 2 CoinDesk report of FTX and Alameda’s blurred funds. He compared FTX’s situation to the crash of TerraUSD and LUNA this year that tanked the crypto market and cost investors billions of dollars. But typically, such moves aren’t announced publicly.

  Zhao’s announcement led to a rapid decline in FTT’s value over the next day as suspicion grew that FTX didn’t have the liquidity needed to back transactions and stay afloat. Bankman-Fried said in a tweet on Nov. 10 that the platform saw $5 billion in withdrawals on Nov. 6.

  On Nov. 11, FTX announced that it had filed for voluntary Chapter 11 bankruptcy proceedings for FTX, FTX.US and Alameda. (source)

• FTX hacker selling ETH

  To add to the chaos, FTX and FTX.US wallets were emptied on the evening of Nov. 11 in an apparent hack. More than $600 million was drained from the wallets, CoinDesk reported. FTX posted about the hack on its support channel the instant-messaging service Telegram, saying, "FTX has been hacked. It turns out that the hacker stole about 230k ETH, worth about $400 million. This made the hacker one of the largest holders of ETH.

  On November 20th, Kamilaz_ETH tweeted that the hacker started selling their ETH in 25k batches for Bitcoin. This put a lot of price pressure on Ethereum

Introduction

In recent days, the price of Ethereum has taken a hit. In this dashboard, we’ll examine why the price of ETH has dropped, and compare it to other tokens.

What is FTX?

FTX is a cryptocurrency exchange founded by Sam Bankman-Fried in 2019, who served as CEO until Nov. 11. The exchange issues its own token, FTT, and was the fourth-largest crypto exchange by volume as of Nov. 9. Bankman-Fried also founded a crypto trading firm called Alameda Research; CoinDesk reported on Alameda’s troubled balance sheet on Nov. 2. Its largest assets, according to the report, are billions of dollars worth of FTT.

Methodology

For each token, the following table were used:

• ETH, MATIC and BTC: ethereum.core.fact_hourly_token_prices For BTC, we use the WBTC symbol.
• SOL: solana.core.fact_token_prices_hourly
• ATOM: osmosis.core.dim_prices
• For AVAX, we use a special method as no price table is available. We determine the price of AVAX by looking at swaps. We can use the avalanche.core.ez_avax_transfers to determine the amount of USD that was paid for an amount of AVAX. We then divide the USD total by the amount of AVAX to determine the price.

Price of ETH

Comparison to other tokens

In this section, we compare the price decrease of ETH to other major token. We look at BTC, AVAX, MATIC, ATOM and SOL.

We can see that the charts look very similar when it comes to overal pattern. We see a high in early November and then a sharp drop after the FTX collapse for all tokens.

In order to compare the tokens we use the percent different since 30 days prior on October 24th.

With this chart we can more easily compare the tokens. We can see that MATIC saw the smallest drawdown compared to 30 days prior, at just 6.5%.

Maybe somewhat surprising is that ETH performed second best among the tokens. Even slighty better than Bitcoin. Especially considering the sell pressure on ETH from the FTX hacker.

We can futher see that BTC, ATOM and AVAX performed very similar over the last 30 days.

The obvious outlier is Solana, with 51% down from 30 days ago. Sam Bankman-Fried was a large investor in Solana and funded and devolped multiple DEXes on Solana such as Serum.

Key Findings

• Over the last 30 days, ETH dropped about 12%. This is due to the FTX collapse and FTX hacker that was selling ETH for BTC.
• Compared to other tokens, ETH held up relatively well.
• The best performer is MATIC with only 6.5% down over the last 30 days.
• BTC, AVAX and ATOM performed similarly with 15-17% down.
• Solana is an outlier at a staggering 51% down compared to 30 days ago. This is due to SBF being an early investor in the ecosystem and built many project on Solana such as Serum.