The crypto market is poised to enter a potentially crucial week. While the market is now preoccupied with the feud between Binance CEO Changpeng Zhao (“CZ”) and FTX CEO Sam Bankman-Fried (“SBF”), the midterm elections, and the release of CPI data, these might have a massive impact on the market.
According to Bitcoinist, CZ said on Sunday that Binance would sell all of its FTT tokens, which indicates FTX’s finances are in trouble.
Despite the fact that FTX and Alameda have refuted the accusations, FTT is currently seeing significant selling pressure in the crypto market.
According to some analysts, this “FUD” will have a huge impact on the markets. As of the time this article was written, the price of Bitcoin had dropped below $21,000, which had broken last Friday and hasn’t been done since mid-September.
Crypto market ahead of midterm elections
Tomorrow, Tuesday, midterm elections will be held in the United States to determine the future composition of Congress. According to Bloomberg, the stakes are enormous for the Bitcoin and cryptocurrency communities.
While the crypto sector awaited clear legislation in 2022, a number of bills that could have advanced the business were submitted. However, political conflicts between legislators and lobbyists and time constraints prevented passage.
Experts predict that the discussion will continue until 2023 unless a crypto bill is tied to a government funding package or another bill that must pass. Bloomberg reports that “this makes midterm elections more critical than ever”.
According to current forecasts, the Republicans could retake both the House and Senate, which could be advantageous for the cryptocurrency business.
Republican Cynthia Lummis and Tom Emmer are two of the crypto industry’s most ardent supporters. Moreover, Bloomberg estimates:
A Republican-controlled Congress would also likely exert pressure on agencies, like the SEC — which the sector has tasked with regulating through enforcement — to soften their stance against cryptocurrency firms.
CPI data release on Thursday
It is unknown whether there will be a positive short-term influence on the market, but it appears unlikely.
Instead, the 10th of November will likely be the focal point. On this date, the most recent Consumer Price Index (CPI) will be made public.
During the most recent FOMC meeting of the U.S. central bank, Jerome Powell frequently emphasized that data must be collected prior to determining the next interest rate policy movements. Thursday may be a critical day for the stock market in this sense.
If inflation turns out to be larger than expected, the markets may respond by selling riskier assets. Conversely, if a significant decrease in inflation is disclosed, a fresh recovery rally may commence in expectation of the FED stopping its rate hike cycle.
At this time, the core CPI, which measures the change in the price of goods and services excluding the food and energy sectors, may be even more significant than the CPI.
If both the producer pricing index (PPI) and the core consumer price index (CPI) decreased on November 15 following a three-month rise, this might be a significantly bullish indicator for the markets.
In earlier crises, including the 1970s, 1980s, and 2008, the PPI served as an early indicator of decelerating inflation, prompting the FED to alter its stance on interest rates.
Consequently, a fall in the CPI and core CPI may portend a near-term shift in the Bitcoin and cryptocurrency markets.
Price Analysis for BTC
The chart shows that BTC has generated a new demand zone at $20,000 above the 50-day EMA (Exponential Moving Average).
As a result of last week’s FOMC results, BTC experienced a dramatic surge in trading volume, leading investors to believe it is forming an uptrend.
However, it is crucial for BTC to maintain its support of around $20,000 this week, as the CPI news outcome might alter the entire direction of the cryptocurrency market and produce FUD, which could lead to a big sell-off and a decrease in asset values.
