Positive US inflation news dulls crypto freefall

Published November 10th, 2022 - 04:19 GMT
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ALBAWABA - The broader crypto market found itself in a mini freefall on Thursday, after Binance withdrew its bailout offer for inundated peer FTX, but found its footing again on positive US annual inflation news.

On Wednesday, Binance CEO Changpeng Zhao said that the exchange pulled out of a non-binding deal to acquire FTX, which recently suspended withdrawals due to a liquidity crisis, on concerns about corporate due diligence and reports that the world’s third-largest crypto exchange mishandled customer funds.

US regulators are also reportedly investigating FTX.

“I f*cked up, and should have done better,” FTX founder and one-time entrepreneur Sam Bankman-Fried posted on Twitter on Thursday, following the collapse of the crypto exchange he founded in 2019.

Bankman-Fried said he was looking for a new bailout offer while conceding that he couldn't make any promises about that, but not finding a solution would leave FTX with few options other than declaring bankruptcy. He told, Bloomberg, on Thursday that the firm needed $4 billion to stay solvent, with a funding gap of $8 billion.

The company needs to find billions of dollars to meet withdrawal demands or reassure customers rushing for the door that their money is safe in order to stem the exodus.

Bitcoin slumped to a new two-year low, tumbling over 10%, before shooting up over $2000 as news hit that US inflation fell back more than expected in October, slowing for the fourth month in a row to 7.7%, the lowest since January, and below forecasts of 8%. In comparison, September’s inflation rate was 8.2%.

Ethereum slumped nearly 12%, its weakest level in four months, but amid the chaos, it stood out with significant gains as investors looked out for the next price movement as most other altcoins logged double-digit losses as Dogecoin slid 5%, while Solana fell 33%.

FTT, FTX’s native token, is down around 90% this week.

"But don’t take your eyes off the bigger trend. Crypto is following the stock market. Blue chip assets like Bitcoin and Ethereum are the tail on the dog, with the dog being the stock market. And that stock market is oscillating back and forth over inflation readings and the Federal Reserve’s approach to interest rates," said crypto data analyst Dan Ashmore on CoinJournal.

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