On Tuesday, US midterm election day, BitMEX co-founder and former CEO, Arthur Hayes shared a tweet in which he compared the battle-torn FTX crypto exchange and derivatives platform to the collapse of the Lehman Brothers international bank in 2008. Hayes referenced “FTX=Lehman”, and shared his opinion that the bottom had not been yet seen, just as was the case when the S&P 500 dipped to a low of 666 on March 6, 2009, months after the 2008 crisis.
The former BitMEX CEO also shared in another public message, that he’d executed a put option bidding on the price of BTC to dip below $15,000 prior to March 2023. Ironically, and unfortunately or fortunately depending on how one is looking at it in this season, the price of Bitcoin did in fact dip to a low below the $15,800 price per coin on Wednesday. The low price level has not been seen in over two years since November 2020. With so many factors at play and influencing the stock and crypto markets presently, many experts are even a bit unsure of the short-term implications and how it will all play out.
Sorting Through The Variables To Determine Market Sentiment
The variable factors which are at play right now in the market are largely up in the air to a degree. On November 2, the Federal Reserve’s FOMC increased the federal fund rate charged to banks for new currency introduced into the economy. In a surprise move, the crypto and stock markets took off just two days following the news, with the immediate following day being largely sideways trading.
Typically the opposite happens when the Fed raises the interest rate, but positive sentiments were building around the likelihood of a slowing in rate increases by as early as the next meeting, scheduled for December 14th. The overall consensus among many experts has been that the market had already accounted for rate rises and was more tuned in to analyze Fed chairman Powell’s cues as to the next few months to close 2022 and open Q1, 2023.
There was also a positive US jobs report recently released by the Department of Labor which was believed to have added to bullish activity in the market at one point. 261,000 jobs were reportedly added to the labor market, above the 214,000 projection. Later, during this week, in fact, the unemployment rate revealed a .2% rise from 3.5% to 3.7%, sending sentiment in the opposite direction.
Turmoil In The Crypto Market?
In today’s crypto news, troubles have been surmounted for the longtime number two crypto exchange by volume, FTX, and sister company Alameda Research. The financial issues led to Binance, headed by CEO CZ, stepping in with plans to purchase the company so long as a thorough business analysis checks out.
The problems faced by FTX sent its native FTT token down by as much as 75% in a day on Tuesday, November 8. The downtrend continued on Wednesday, and at the time of writing, FTT is trading around $3.50, down almost 40% on the day. Most assets making up the rest of the crypto market suffered from massive price drops on Tuesday and Wednesday as well.
Bitcoin Drops To Two-Year Lows
The price of the top traded and largest digital asset ecosystem, Bitcoin, dipped below $18k, to around $17,300 on Tuesday, and was driven further on Wednesday, falling to a low of around $15,800 for the first time since 2020. Even as the market suffers, many experts are predicting the bottom has not yet been reached.
Ethereum, the largest altcoin in the crypto market, fell to new recent lows, almost touching the $1,100 level per ETH. The difference between the price levels of ETH and BTC, the undisputed leaders in the digital assets market is, ETH was at a level of under $1,000 just in June of this year, so in theory, the top altcoin has more room to fall in the current turbulent market.
Solana (SOL) and Cardano (ADA) were amongst other significant downtrending digital assets between Tuesday and Wednesday also, with Solana reflecting a massive 40% loss on the day at the time of writing. There were rumors of a massive sell-off which could affect the price even more in the very near future.
What’s To Come?
The market always has the last say, but if the analysis is correct, and the impact of liquidity issues faced by FTX and Alameda Research have yet to be felt in the market, then available signs point to a continued downtrend.
Financial experts, professional traders and all those following the market trends will be on the lookout for the most recent CPI data scheduled for release on November 10. The consumer price index (CPI) is the most heavily leveraged data metric used by the Federal Reserve to determine the impact that rate adjustments have had on the economy, and what should be done thereafter.
A high or low CPI reported this Thursday could give insight into what the next immediate up or downward trends that could be seen in the stock market, across major indexes, foreign currency exchange, and the digital assets market sector.
At the time of writing the S&P 500, NASDAQ and DOW Jones are all down almost 2% each, with the NASDAQ showing the greatest loss on the day between the three indexes.