While the market is currently flooded with news of the battle between Binance CEO Changpeng Zhao ("CZ") and FTX CEO Sam Bankman-Fried ("SBF"), the midterm elections and the release of US CPI data are two big events which could be of crucial importance for the market.
As Bitcoinist reports, CZ announced on Sunday that Binance will sell all of its FTT tokens after a report surfaced that FTX's ledgers were in trouble. Although FTX and Alameda have denied the rumours, a lot of selling pressure is currently building on FTT.
According to some analysts, this "FUD" could have a significant impact on the markets. At press time, the price of Bitcoin broke below the important $21,000, a mark that was breached last Friday and was crossed for the first time since mid-September.
Bitcoin Ahead of Midterm Elections
Tomorrow, Tuesday, mid-term elections will be held in the USA, where the composition of Congress will soon be decided. As Bloomberg reports, the stakes are high for Bitcoin and the crypto community.
While the crypto industry waited for clear regulation in 2022, several laws were introduced that could move the industry forward. However, political disputes between lawmakers and lobbyists, as well as time pressure, prevented passage.
Experts believe the debate will now drag on into 2023, unless a crypto bill is attached to the government's funding package or another bill that absolutely must pass. "That makes the midterm elections more important than ever," Bloomberg reports.
Current predictions predict that Republicans could take back both the House and Senate, which could benefit the crypto industry. In Cynthia Lummis and Tom Emmer, Republicans provide two of the crypto industry's biggest supporters.
Bloomberg also estimates: A Republican-controlled Congress would also likely pressure agencies such as the SEC — which the industry has been tasked with regulating through enforcement — to tone down its aggressive stance against crypto companies.
CPI data released on Thursday
Whether there will be a positive impact on the market in the short term remains to be seen, but it is unlikely. Instead, all eyes are likely to be on Thursday, November 10. On that day, the new consumer price index (CPI) will be published.
During the last FOMC meeting of the US central bank, Jerome Powell conspicuously often emphasized that one must wait for data to determine the next steps in interest rate policy. In this sense, Thursday could be a crucial day for the financial markets.
If inflation rises as expected, markets may react by selling off risk. Conversely, if a significant decline in inflation is announced, the start of a new recovery could be triggered by the expectation of a slowdown in the pace of rate hikes by the Fed.
This time even more important than the CPI could be the core CPI, which measures the change in the costs of goods and services excluding the food and energy sectors. Provided the core CPI falls for the first time after a three-month rise and producer prices (PPI) also fall on November 15, this could be a strong bullish sign for the markets.
In previous crises, such as the 1970s and 1980s and also in 2008, the PPI was always the leading indicator of calming inflation, which ultimately led to the Fed's rate hike. Therefore, the drop in CPI and core CPI could be the beginning of an imminent move for Bitcoin and the crypto market.