5 Things to Know in Crypto Today: Fed & Recession Fears Grip

Key Insights:

• Ethereum (ETH) and bitcoin (BTC) sink on renewed Fed and recessionary fears.
• Regulators continued to turn the screw, with FTX in the spotlight.
• Helium (HNT) bucked a bearish market trend on news of a Binance accounting error.

Fed and Recession Fears Jolt the Crypto Market

This morning, the total crypto market cap tumbled by $27.8 billion to $867.6 billion. Fed and recession fear sent the crypto market tumbling on Sunday, and bearish sentiment has continued through this morning’s session.

Last Tuesday’s US CPI report caught the markets off guard, and while economic indicators raise red flags, central banks remain committed to front-loading rate hikes to bring inflation to target.

According to the CME FedWatch Tool, the probability of a percentage point rate hike on November 2 sits at 13.3%, up from 0.0% a week ago. While the chances of a 75-basis point rate hike held steady, the probability of a 50-basis point rate fell from 30.7% to 27.0% over the last seven days.

While the numbers in isolation may be of little concern, fears of a global economic recession and a hawkish Fed are negative for cryptos.

On Thursday, the World Bank issued a press release titled ‘Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes.’

The World Bank highlighted the risks of a ‘string of financial crisis in emerging market and developing economies that would do them lasting harm.’

The report preceded a FedEx (FDX) warning of deteriorating economic conditions on Friday. FedEx was not the first to raise concerns. In July, Walmart (WMT) hit the crypto market with a warning of its own.

Helium (HNT) Leads a Choppy Market

This morning, HNT surged by 17.5% to $4.67.

The bounce back from sub-$4.00 came on news of a Binance accounting error leading to the mass selling of erroneously allocated HNT tokens. The Binance error was an accounting error, classifying HNT and the network’s second token, Mobile, as one token.

Binance credited users who deposited Mobile tokens with the higher valued HNT tokens. Holders quickly sold the HNT tokens, leading to the price slide.

South Korean Authorities Request Interpol Red Letter to Nab Do Kwon

Last week, South Korean authorities issued an arrest warrant for Terra Labs founder Do Kwon. Since then, the situation has become direr. The hunt for Do Kwon has intensified, culminating in authorities calling on Interpol to issue a red letter.

Over the weekend, the Singapore government stated that Do Kwon was not living in Singapore. Even Do Kwon stated that he was not on the run, saying,

“I’m not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide.”

However, investors showed little concern. At the time of writing, LUNA was up 12.2% to $0.000309.

The Financial Conduct Authority Raises FTX Red Flag

FTX has had plenty of news coverage in recent days. Over the weekend, FTX CEO talked of a $1 billion crypto chest to acquire or aid ailing crypt-related firms.

However, the news has not all been FTX-positive. Last week, the FTC warned that FTX is an unauthorized FTC entity. In the announcement, the FTC stated,

“The firm is not authorized by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”

The Ripple Team Share Their Views on the SEC

Following the weekend filings, Ripple CEO Brad Garlinghouse stated,

“Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”

Ripple Defense counsel Stuart Alderoty said,

“My hot take – after two years of litigation, the SEC is unable to identify any contract for investment (that’s what the statute requires); and cannot satisfy a single prong of the Supreme Court’s Howey test. Everything else is just noise.”

Fed and recession fears overshadowed investor optimism for a favorable outcome to the SEC v Ripple case on Sunday and this morning. On Sunday, XRP came within reach of $0.40 before succumbing to market forces.