Major cryptocurrencies crashed Tuesday evening as the global cryptocurrency market cap plunged 10.4% to $916.2 billion at 8:09 p.m.

Why It Matters: $Bitcoin (BTC.CC)$'s price fell below the $17,500 mark on Tuesday — the lowest market price in two years, noted Santiment.

Overzealous traders on exchanges attempted to short [BTC] as prices were showing a very mild recovery, expecting further drops. Instead, liquidations happened." 

- tweeted the market intelligence platform.

A "significant liquidity crunch" at the second-largest cryptocurrency exchange, FTX, means that the exchange will be acquired by rival Binance.

The development took place after the Sam Bankman-Fried-led FTX asked for help, according to Changpeng Zhao, the CEO of Binance.

Edward Moya, a senior market analyst with OANDA, said cryptocurrencies were "tumbling" after the liquidity crunch at FTX and the sale of the company.

"Today is a bad day in crypto. Binance had to step in to save Sam Bankman-Fried's FTX crypto exchange."

Bankman-Fried "has been the white night during this crypto winter and a liquidity crunch for him has triggered a wave of uneasiness across the cryptoverse," said the analyst, in a note seen by Benzinga.

"Many crypto companies will likely be vulnerable to further selling pressure here given the current macro backdrop but that probably won't deter a lot of the institutional money that is still coming in or is locked into the space."

The massive plunge in cryptocurrency valuations was in contrast with stocks which ended in the green on Tuesday. The $S&P 500 index (.SPX.US)$ and $Nasdaq Composite Index (.IXIC.US)$ closed the day 0.6% and 0.5% higher respectively. Stock futures were mostly unchanged as investors awaited the results of the U.S. midterm elections.

Amsterdam-based cryptocurrency trader Michaël van de Poppe tweeted Tuesday that the "big ball play" between FTX and Binance was killing the markets.

Justin Bennett said Zhao was the "aggressor" in the FTX-Binance saga and had the "chance to settle things without damage. He chose violence."

"I don't side with CZ or SBF. I'm on the side of crypto, and none of this looks good to regulators who are losing confidence minute by minute," said the trader.

Meanwhile, the total liquidations in Bitcoin futures markets have exceeded $121 million during the recent sell-off, according to Glassnode. Most of the liquidations — $106 million — were long positions.