Bitcoin and Ethereum were above their respective key psychological levels on Monday evening as the global cryptocurrency market cap dropped 0.5% to $1.02 trillion at 8:46 p.m. EST.
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Why It Matters: BTC and ETH were seen trading above the $20,000 and $1,500 marks at the time of writing — although both were in the red.
Among other risk assets, U.S. stock futures were higher ahead of the U.S. midterm elections slated for Tuesday. The S&P 500 and Nasdaq futures were up 1% and 0.85% respectively at the time of writing.
Investors are “fixated” on consumer price inflation data, due on Thursday, according to OANDA Senior Market Analyst Edward Moya.
“The reason investors are so fixated with this week’s inflation data instead of the midterm election is that it seems highly likely the Republicans will win one of the chambers this week.”
“Bitcoin should still find a home above the $20,000 level post-midterms as long as we don’t get a Democratic surprise. A Republican sweep could support a push above the $21,000 level for Bitcoin but that might not last until the latest inflation data,” wrote Moya, in a note seen by Benzinga.
Almeda Research, a quantitative cryptocurrency trading firm, is in the eye of the storm over reports that billions of dollars worth of its assets are linked to Sam Bankman-Fried’s FTX cryptocurrency exchange’s token.
Compounding the scenario is a battle of exchanges taking place between Binance and FTX. Binance CEO Changpeng Zhao said he would liquidate the company’s entire holding of FTX (FTT) tokens over “revelations” that have come to light recently.
Caroline Ellison, the CEO of Almeda, has offered to purchase Binance’s entire holdings at a set price of $22 per token.
Kaiko Research said in a note that it would take $4.4 million worth of FTT market sell orders to push down the price by 1% across all markets.
“Overall, it is clear that FTT market makers are working overtime to maintain the price of FTT, which is down 3% over the past day along with most other cryptocurrencies. Despite a massive surge in selling pressure, there is barely a dent in market depth and only a slight increase in price slippage,” said Kaiko.
“Ultimately it may be in all parties’ best interest to engage in an OTC transaction as suggested by Caroline Ellison to limit price impacts, especially considering Binance, FTX, and Alameda all risk large losses should FTTs price fall significantly,” said the market data company.
Michaël van de Poppe said that there was a lot of fear, uncertainty, and doubt surrounding FTX. The trader said, “Could bring a significant impact on the markets, but I don’t think we’ll see this happening anytime soon, as the case is different from Celsius. It’s not great for the overall sentiment, regardless.”
Santiment said on Twitter that Ethereum has seen accumulation from small, medium, and large traders since last October.
“All tiers have risen their percentage of supply held, outside the exchange/founders addresses that hold 10m+ [ETH].”
The market intelligence platform said it could be that the traders are “swapping risky assets” to blue chips such as ETH.
“Taking profits from altcoins and moving back to blue chips could probably mean the end of the rally for some time,” said Santiment.