The new crypto-week started with weekend losses across the broader market and tensions surrounding the controversy between Binance and FTX. The majority of cryptocurrencies, including Bitcoin and Ethereum, have given up their moderate weekend gains today in the run-up to the US midterm elections.

The market leader lost ground above $21k earlier today before printing other minor red candles to $20,575, where it was last spotted. The encroaching negative sentiment around Bitcoin comes as market participants brace for the release of inflation data, diluting the latest relief rally inspired by Friday’s report of US job growth.

Ethereum’s native token has, in contrast, put up a much more resilient display regaining the $1,600 mark, following a bounce from an intraday low of $1,550 to $1,601 at writing.

Key market events lined up for this week

Tomorrow, US citizens head to the ballot to decide on the composition of the Congress and the next administration in the midterm polls. Democrats have a bigger influence in the House of Representatives, but recent surveys predicate the Republicans to sweep the majority of seats in one of the houses. The final results of who will control the House and the Senate for the upcoming year are especially of particular interest to traders and market observers alike.

Investors gear up for the US midterm election outcome

For starters, the election results will define the regulatory landscape for digital assets and the crypto space in general. Several issues previously raised by lobbyists and lawmakers around crypto regulation are also increasingly likely to spill into next year. Besides, the majority of those set to cast their ballot on Tuesday are expected to vote by mail which could result in inconsistent initial vote tallies, potentially setting the market up for volatile action.

Worth noting, neither the S&P 500 nor Nasdaq Composite Index has traced any wild movement in the run-up to the polls hinting at a sense of calm amid a decoupling shift.

“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen.” Bank of America analysts previously opined.

Upcoming CPI print

Later this week, on Thursday, Nov. 10, the US Bureau of Labor Statistics is set to release October’s consumer price index (CPI) data, which shows the monthly and year-over-year change. A higher-than-expected inflation print will likely birth a risk-sell-off, while a significant dip could breed a market-wide recovery run in anticipation of less aggressive measures by the Federal Reserve. Though Bitcoin rallied to its highest mark in four weeks on Saturday, market data heading into the new week shows that optimistic-minded holders turned a blind eye to the same. The disinterest and apparent reluctance to build leveraged long bets, evidenced by the neutral/negative reading of the premium on Bitcoin futures, suggests a lack of confidence in the market at the moment among pro traders.

Binance, FTX feud adds to uncertainty factors in play in Moonvember

Macro volatility remains the dominant theme this week, but recent controversial events around Binance and FTX exchanges have taken the spotlight. Just weeks after receiving backlash for proposing highly controversial regulations to govern cryptocurrencies, particularly decentralized finance, FTX Chief Executive Sam Bankman-Fried could now face a test of trust from the crypto community. Binance CEO Changpeng Zhao revealed over the weekend that his exchange and trading platform Binance would be offloading all its holdings in FTT, FTX’s native token.

The crypto executive claimed that “recent revelations that have come to light” were the motivation behind the decision, explaining that it wasn’t a shot at a competitor. He added that Binance usually supports collaboration in the crypto space, and it would hurt to see a project publicly fail while still in this nascent stage of the industry. Binance is ideally a hodler, which minimizes its probability of attacking a competitor whose tokens it has invested in.

CZ also said that Binance had taken the lesson from LUNA’s capitulation to dump all its FTT as part of its post-exit risk management strategy. The exchange CEO noted that Binance’s stance “against other industry players behind their backs” motivated the decision. Zhao’s admission came after the crypto community determined that his exchange had begun slowly dumping FTT, starting with in excess of $500 million (22,999,999 FTT tokens), which Zhao has since confirmed to be true.

Some in the crypto community expected to see Binance’s actions result in a death spiral owing to the massive FTT-backed loans held by Bankman-Fried’s quantitative trading firm Alameda Research. However, Zhao has given assurance that with the currently constrained liquidity and bear market conditions, Binance intends to liquidate its position over several months. This would also achieve the best mechanism to liquidate with the least impact on the market.

Bankman-Fried extends an olive branch

SBF earlier rubbished misleading reported media claims as “unfounded,” explaining that his exchange is highly regulated and keeps audited financials to go with. The FTX exec further elaborated his stance today, arguing that it’s the case of a competitor trying to take down the exchange based on false rumors. He assured users that all assets were fine and exchange operations proceed as usual, then capped his Twitter thread by urging the Binance CEO to work together for the ecosystem.

In a tweet shared today, market analyst Pentoshi weighed on the turmoil, describing it as a pain to retailers and overall negative for the industry.

Altcoins post mixed performance

In the alt markets, Solana is one of the market’s standout tokens, having printed the largest daily candle among the top ten cryptocurrency projects. The SOL coin lost support above $30 earlier and is changing hands at $29.51, down 11.71% in the last 24 hours.

Polygon (MATIC) is another notable project, having gained roughly 5% in the last 24 hours, bringing the cumulative gains in the last week to 36.50%.

Behind the rally are a series of network developments and a surge in buying activity as investors favor assets with strong fundamental trends and high adoption potential. Institutional initiatives, including the latest developments around Polygon’s partnerships with Meta and Reddit, have seen the MATIC token clear $1.00 resistance. Other top altcoin gainers at the start of the week include Chainlink (LINK), STEPN (GMT) and Livepeer( LPT).

Expectations for ‘Moonvember’

November is lining up to be another action-packed month, but the pressure mounted by bears makes the target of a $25,000 daily close almost far-fetched. Hopes of a breakout from the current stasis zone and lasting retest of this mark ultimately rest upon containment of the rampant inflation, improvement in macroeconomic conditions, and easing of tension in Europe.

To learn more, visit our Investing in Bitcoin guide.

The post Bitcoin Holds Above $20K as Wider Crypto Market Braces for Turbulence This Week appeared first on Securities.io.