The recent crisis in the world’s third-largest crypto exchange, FTX, is creating more devastating conditions in the Bitcoin and crypto market. Over the past few days, the FTX token (FTT) has lost more than 70% of its value. The events seem to have unlocked the bears into the market. As a result, the cumulative market cap has drastically decreased, indicating an overall negative performance. Related Reading: Bitcoin On-Chain Data: Selling From Whales Holding 1k+ BTC Behind Crash Also, several other crypto assets have been in the south. For example, Bitcoin has experienced more downward pull this week. The price of BTC has dipped by almost 21% in just five days. The primary crypto asset, Bitcoin, now trades at $17,745, showing in increase The impact of the bearish crypto market is gradually spreading. The largest global institutional Bitcoin fund, the Grayscale Bitcoin Trust (GBTC), has been caught in the web of the crisis. Grayscale Bitcoin Trust Caught In The Web Of FTX Crumble A report revealed that GBTC ended the day at a record discount of 41%. Its price was $8.76 per share. The BTC trust has been plummeting for almost a year since November 12, 2021, after hitting its high of $51.47 per share. GBTC has a structure issue since it is an investment trust fund. Hence, it lacks the free creation of its shares or a suitable redemption program. Such a lapse offers significant price discrepancies against the fund’s underlying BTC holdings. Subsequently, Grayscale has been attempting to convert GBTC to an exchange-traded fund (ETF). This will enable the market maker to create and redeem shares and permanently reduce the premium and discount of its shares. Having filed its application in October 2021, Grayscale now awaits the decision of the Security Exchange Commission (SEC). However, the SEC officially denied the firm’s allocation in converting GBTC to a spot Bitcoin ETF on June 29. The denial didn’t go down well with Grayscale, as the company took the matter to court. It filed the opening legal brief on October 11, challenging the decision of the SEC. Related Reading: Bitcoin Bear Markets Compared: How Much Longer Till The Bottom? | BTCUSD November 9, 2022 Root Of FTX Crypto Exchange Crisis The recent crisis and collapse of the FTX crypto exchange are traced back to November 2. Then, Alameda Research, owned by Sam Bankman-Fried (SBF), suffered a balance sheet leakage. This revealed that the firm holds a large amount of FTX Token (FTT), the native token of the FTX crypto exchange. The fact that a prominent trading firm holds a massive amount of a token raised concern in the crypto community. Hence, there were multiple questions regarding the relationship between FTX and Alameda. The entire saga created doubts in most users of FTX leading to panic withdrawals of funds from the platform and its crumble. On November 7, there was over $451 million worth of stablecoin outflows on FTX, as per data from Nansen. Featured image from Pixabay, chart from TradingView.com