It’s been a busy week for crypto and it’s just Tuesday. The industry shake-out that followed May’s crypto crash is having some unprecedented effects. Even on one of its most eventful days of the year, Binance (BNB-USD) can’t hold onto its gains. But why did crypto crash this week? Most of the downward momentum comes from FTX’s liquidity drama, but factors like Bitcoin’s (BTC-USD) decline add to the fire.

The global crypto market capitalization is back under $900 million for the first time in weeks. Almost all major cryptocurrencies are trading in the red. What gives?

Well, much has to do with Bitcoin’s price volatility. The world’s No. 1 crypto has fallen to its lowest price in the year today at just $17,600. Ethereum (ETH-USD), meanwhile, continues to plunge back down to about $1,300, a price floor it had maintained throughout much of late September and October.

Some analysts point out that the lows come on an important election day in the U.S. And, they come just two days before the next Consumer Price Index report. Indeed, the market has been proven to drop as inflation affects spending. Many predict the October CPI report will show off higher-than-expected inflation figures once again.

Seeing as Bitcoin acts as a bellwether for the crypto industry, it would make sense that many cryptocurrencies are moving down in tandem. However, there’s a major news thread this week that drastically amplifies the bearish momentum plaguing the market. FTX’s rapid downfall and the revelations around the company’s liquidity crisis have caused fear of another Terra (LUNA-USD)-esque situations.

Why Did Crypto Crash? FTX Meltdown Drives Crypto Into the Red.

FTX is preparing to sell itself to competitor Binance. The Sam Bankman-Fried-led exchange built itself up as infallible, surviving earlier drama in 2022. Conducting several major acquisitions and bailouts, the company seemed like it was completely unaffected by the market meltdown of May.

And yet, the last few days suggest this was all an illusion. Rather, FTX was secretly stuck in a liquidity crisis that only revealed itself after CoinDesk reported that sister company Alameda Research counted roughly $6 billion of FTX Tokens (FTT-USD) among its $14.6 billion in assets.

As competitor exchange Binance began selling off its FTT stake, the price of the token dropped significantly and FTX halted all withdrawals from its platform.

Binance is winding up on top. On Tuesday, investors learned that it had signed a letter of intent to acquire its long-time rival.

The news caused the BNB crypto to surge immediately. However, like all other cryptos today, it is back down in the red. This could be due to consumer sentiment tanking. FTX was one of the largest and most-trusted crypto exchanges in the world. And yet, it apparently was melting down behind the scenes. Investors are now left to once again revaluate the market.