(Kitco News) - Contagion fears have taken a toll on the crypto market Tuesday as a feud between two of the biggest cryptocurrency exchanges in the industry – Binance and FTX – has led to market-wide declines as traders have opted to sit on the sidelines in the safety of stablecoins.
The fall in crypto prices is occurring against the backdrop of midterm elections in the U.S., which has taken the pressure off financial markets as all eyes are focused on which party will come out ahead in one of the most contentious elections in modern times.
According to various analysts and strategists, it’s widely anticipated that a Republican victory would be positive for the stock market, while the outlook is less rosy in the case of a Democratic triumph.
“If Republicans do well and take back control of one or both chambers of Congress, we see the event as a positive for the stock market into year-end,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, wrote on Monday. “We believe the October move [in the S&P 500] was fueled in large part by the shift in momentum away from Democrats and back towards Republicans that we started to see in polling data and betting markets that was building in August and September.”
Data from TradingView shows that bears took control of the Bitcoin (BTC) price overnight and managed to drive it down to a low of $19,265 before bulls awoke from their slumber and bid it back above the psychologically important $20,000 support level. The 7% intraday swing sent prices across the market plunging as flashbacks to the Terra/Luna debacle sent traders fleeing for cover.
BTC/USD 4-hour chart. Source: TradingView
At the time of writing, Bitcoin is trading at $19,883, marking a decrease of 4.08% on the 24-hour chart.
The two-week low in Bitcoin price was touched on in the morning update from Kitco senior technical analyst Jim Wyckoff, who noted that the “price uptrend on the daily bar chart has now been negated and bears have quickly gained fresh technical strength to suggest some more downside price pressure in the near term.”
The midday bounce in the price of BTC came after Binance CEO Changpeng Zhao posted the following tweet suggesting that the exchange is in the process of acquiring FTX.com in a bid to help ease a liquidity crunch.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ ?? Binance (@cz_binance) November 8, 2022
While many were quick to assume that this would put an end to the current pullback and reinitiate the uptrend witnessed the week prior, cryptocurrency analyst il Capo of Crypto posted the following tweet offering a word of warning.
Remember that this is a dead cat bounce. Every bounce is a short/exit opportunity.
— il Capo Of Crypto (@CryptoCapo_) November 8, 2022
As for what a pullback in BTC would look like under the worst-case scenario, market analyst Crypto Tony provided the following chart suggesting that Bitcoin could eventually fall all the way to the $8,000 to $10,000 range.
$BTC / $USD - Macro update
— Crypto Tony (@CryptoTony__) November 8, 2022
My bottom prediction is between the $10,000 - $8,000 support region. This is a combo of TA, Wishful thinking and Macro economics
I am positioning in particular assets now, and will ladder into others on the drop. Plan initiated ?? pic.twitter.com/kzw7Y3XPx6
Altcoin market bleeds
As has historically been the case, when Bitcoin goes for a tumble, so does the broader altcoin market, and today is no exception.
FTT Token (FTT), the native token of FTX, has been the hardest-hit in the top 200, trading down 19.64% and fetching a price of $18.39 at the time of writing.
Daily cryptocurrency market performance. Source: Coin360
Notable gainers on the day include Reef (REEF), which climbed 14.29% to trade at $0.0057, as well as a 13.21% gain for BNB and a 9.63% increase for Chainlink (LINK).
The overall cryptocurrency market cap now stands at $1.025 trillion, and Bitcoin’s dominance rate is 38.3
