Binance announces plans to buy FTX as markets await midterm election results. Bitcoin wriggles.
The towel burns between Binance and FTX
Binance is the biggest exchange in the world with volumes ten times higher than its first competitor and other giants like Coinbase or BitMEX.
Another opponent landed in May 2019. Samuel Bankman-Fried (SBF) made a sensational entry into the arena by creating FTX.
FTX became in 2022 the second exchangeeven starting to overshadow Binance a bit.
This meteoric growth annoys Changpeng Zhao, the CEO of Binance. Especially since SBF is playing around with the regulator to try to take cover and harm its rival.
FTX was indeed the second largest donor to Biden’s campaign. And for what result? A “Digital Dollar” in the boxes and still no ETF. Cheer.
SBF’s regulatory proposals caused an uproar, as did his interview in the Financial Times which sounded furiously like a declaration of allegiance to the system.
The young billionaire promoted the Proof of Stake while roughly stating that the energy consumption of bitcoin would be related to the number of transactions:
“We can’t increase the transaction speed to the point where we have to spend 100 times more energy mining.”
SBF suddenly becomes an enemy, so an incriminating article from Coindesk quickly caused a stir. Our colleagues there revealed that a large part of the $ 14.6 billion in assets on the balance sheet of Alameda (the investment arm of FTX) was in fact made up of its FTT token.
The FTT token is to FTX what the BNB token is to Binance. Users of these exchanges use it to pay less transaction fees.
Coindesk wrote November 2:
“Alameda’s balance sheet is filled with FTT […]. While there is nothing untoward or bad per se about this, it does show that the Alameda giant fund is mostly made up of a token created by a sister company,” not real dollars or BTC. .
Coindesk quotes Cory Klippsten, CEO of the Swan Bitcoin investment platform, who spills the beans:
“It is fascinating to see that the majority of Alameda’s net equity is actually FTX’s own token, centrally controlled and printed ex nihilo.”
It was enough to throw shame on FTX which quickly found itself in turmoil. CZ took the opportunity to compare FTT to LUNA before announcing the FTTs that Binance bought during the ICO for a pittance.
As a result, the FTT token has lost 40% of its value since the start of the week, also taking bitcoin down with it.
Until the situation turns around… Binance will finally buy out its competitor!
The news caused BTC/USD to jump $1000 in one hour. To be continued in the next episode…
What impact on bitcoin if the Republicans offer Congress?
After the 0.75% hike in the Fed’s key rate last Wednesday, all eyes turn this week to the US midterm legislative elections and the latest inflation figures.
US inflation stood at 9.1% in June, then fell back to 8.5% in July, to slide further to 8.3% in August 2022, and finally to 8.2% in September. Wall Street expects annual inflation to “come down” to another 8% in October.
The latest inflation figures will be released on Thursday. Further moderation could prompt the Fed to slow its rate hike.
Falling purchasing power will certainly be a key factor in the results of the midterm elections taking place on Tuesday.
The 435 seats in the House of Representatives and a third of the Senate, or 35 of the 100 seats, are up for grabs.
Polls suggest the Democrats will lose control of the House of Representatives, or even the Senate. In this scenario, Republicans will force President Biden to implement tax cuts worth hundreds of billions of dollars a year.
Bloomberg reports that in Pennsylvania, “Senate candidate Mehmet Oz has won support from President Donald Trump because of his support for tax cuts.”
Stephen Moore, an economic adviser to Trump, warns that “It will be war on Washington over which of Trump’s tax cuts will be extended”can we read in the Wall Street Journal.
By the way, the former tenant of the White House says he will make a “big announcement” November 15:
“We want to make permanent the tax cuts of the Tax Cuts and Jobs Act » put in place under the Trump era, argues a Republican aide to the chamber at Reuters. “If Biden wants to veto, he will have to take responsibility for raising taxes for the middle class. »
Republicans are already calling for the extension of three corporate tax breaks. That’s about $60 billion a year that would add to the annual federal deficit of 1400 billions of dollars.
The risk being that the reaction of the markets is the same as in England. As a reminder, the Bank of England was forced to restart its Quantitative Easing in the face of the financial turmoil caused by Elizabeth Truss’ tax cuts.
Moreover, it seems that we have reached the peak of foreign exchange reserves held in dollars. This strongly suggests that the US debt is no longer in the odor of sanctity. This would force the FED to replace foreign central banks. Brrrr…
Could a Republican victory worsen liquidity in the US debt market? And hasten the “pivot” of the Fed? Such an outcome would be positive for the stock market.
This would indirectly be positive for bitcoin, which is considered an asset “to risk “. The decrepitude of the fiat system is apparently not quite advanced yet… But let’s bet that double-digit inflation will eventually take effect…
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