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Crypto mayhem continues, US inflation looms and the battle for the Senate rages on. This time around, the turmoil in Bitcoin and Co. appears [View in browser]( [Bloomberg]( Crypto mayhem continues, US inflation looms and the battle for the Senate rages on. Crypto mayhem This time around, the turmoil in Bitcoin and Co. appears to have spilled over into the wider market, with losses sustained by retail -- and some professional -- investors hurting risk appetite and forcing drawdowns in stocks on Wednesday. Sam Bankman-Fried told FTX.com investors that without a cash injection the company would need to[file for bankruptcy](, according to a person with knowledge of the matter. Bitcoin rose on Thursday after tumbling to levels unseen since November 2020. Inflation outlook The all-important inflation data is out in the US later today, with expectations for a fall in the headline number, from 8.2% y/y to 7.9%. Nevertheless, inflation expectations data released on Friday may [carry more weight]( with the Federal Reserve. Central bankers will be looking for signs inflation is becoming entrenched, in the University of Michigan's measure of 5-10 inflation expectations. The Fed has reiterated its resolve in tackling the overheating of the economy, with Minneapolis Fed President Neel Kashkari [saying on Wednesday](: "We are going to get inflation back down," adding that "any talk of a pivot is entirely premature." Three races The struggle for control of the US Senate boiled down to [three races]( in Georgia, Arizona and Nevada, with each party needing to win two of those states to secure a majority. Democrats need 50 seats to control the Senate with Vice President Kamala Harris’s tie-breaking vote, while GOP needs to capture 51. Republicans are currently locked into 49 Senate seats and Democrats at 48. Also, President Joe Biden [said he]( still plans to seek re-election and that he’d likely make an official call early next year. He hailed the “strong night” Democrats had in Tuesday’s midterm elections, but acknowledged voters’ frustration with the country’s direction. Modest gains Risk appetite [recovered slightly]( and a reprieve in cryptocurrencies helped. Bitcoin advanced as much as 7.4% after hitting a fresh low for the year. S&P 500 and Nasdaq 100 futures made modest gains as of 6:00 a.m. New York time. In Europe, utilities and health care outperformed while real estate and retail lagged. The dollar climbed to session high, rising against all G-10 currencies, barring Sterling. The yield on 10-year Treasuries were fairly steady at around 4.11%. Gold was little changed, and US oil benchmark futures fell below $85 a barrel. Coming up… Yep, it's all about that big inflation reading, which is due at 8:30 a.m., along with weekly US jobless claims data. There's also a rate decision in Mexico at 2 p.m. to look forward to. Earnings include WeWork, US Foods, Ralph Lauren. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [Get back to the office](: Elon Musk’s first message to Twitter employees - [Amazon loses $1 trillion]( in market value - A [World Cup flop]( awaits British pubs - What a [shrinking Mississippi river]( means for global food supply - How [Gen Z workers get ahead](, even when working remotely - [Hedonism roars back]( to Mediterranean party islands - How women [clawed back ground](for Democrats And finally, here’s what Joe is interested in this morning The primary purpose of crypto is "number go up." When "number go down," it's not doing its job. So naturally, any interest in the space is going to wane during times when there's a lot of red on the screen. But this is true of stocks as well. Everyone wants in during the boom. Everyone loses interest during the bust. Wash, rinse, repeat, etc. All that being said, there's another dynamic with crypto specifically that I think will make the SBF disaster painful and damaging for a long time to come. One of the big trends in recent years has been the rush of "institutional money" into the space. "The institutions are coming" has been a major bull narrative. But institutions have faced an obvious dilemma. Crypto might be a big scam, and there's a lot of reputational risk associated with it. Like do you really want to be the allocator at a big endowment or something that placed a big bet on Beanie Babies? On the other hand, crypto might be the future of finance and the Web. And so do you really want to be the allocator that missed this ongoing revolution? There's plenty of opportunities to be humiliated in both directions! But investors found a solution: Invest in blue chip entities that have good reputations that are also in crypto. So for example, VC firms that have gotten into this space are in the sweet spot here, where the allocator can have "crypto exposure" while also investing in a vehicle associated with a reputable brand that long precedes the industry. It's pretty obvious that SBF came to occupy this space, allowing investors to have exposure to the industry, with minimal reputational risk. Now the empire is in tatters of course. But who else is there now? Who are you going to trust if your job is to invest on behalf of some big fund or corporation or endowment? So yes obviously, the massive plunge in the value of the coins will naturally ice the interest in the space. But now beyond that there are fewer entities that can solve the embarrassment problem that make people feel comfortable investing in the first place. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwartÂ]( Follow Us Like getting this newsletter? 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