Bitcoin, Ether fall, other top cryptocurrencies pull back as bank liquidity worries mount

Bitcoin and Ether fell in Thursday morning trading in Asia along with the rest of the 10 non-stablecoin cryptocurrencies. Solana led the losers. The declines come on concerns that bank failures in the US in recent weeks could point to broader problems in the financial sector after months of interest rate hikes in the US and Europe. Shares in Credit Suisse Group AG fell sharply on Wednesday, unnerving US stock markets. Regulatory challenges remain a background concern for crypto-related businesses.

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Fast facts

• Bitcoin fell 1.79% in the last 24 hours to USD 24,345 at 09:00 a.m. in Hong Kong, according to CoinMarketCap data, but held on to a seven-day gain of 11.99% after a strong rally earlier in the week.

• Ether fell 3.25% to $1,650. It is up 7.41% in the last seven days.

• Solana led the losers in the top 10 non-stablecoin cryptocurrencies, falling 8.71% to $19.11. Formfunction, an NFT marketplace on the Solana blockchain, announced on Wednesday that it would cease operations by March 29, saying only that it cannot continue to operate.

• Regulatory confusion and pressure are other factors in the pullback in cryptocurrency prices. US-based digital asset platform Anchorage Digital said on Tuesday it would cut around 20% of staff to restructure amid regulatory uncertainty. Exchange Binance said this week it will stop handling sterling transactions for UK customers citing pressure from regulators, as the US Justice Department seeks to block the $1 billion sale of bankrupt crypto lender Voyager to Binance. Add to this mix the collapse of crypto-friendly banks this month.

• The total crypto market capitalization fell 2.48% in the last 24 hours to $1.06 trillion. Total trading volume in the last 24 hours fell 18.36% to 82.90 billion USD.

• US stocks closed mixed on Wednesday. The Dow Jones Industrial Average fell 0.87%, the S&P 500 fell 0.70% and the Nasdaq Composite Index rose 0.05%.

• The market fell earlier in the session after Credit Suisse shares fell nearly 30% following the bank’s Tuesday statement about “material weaknesses” in financial reports. This prompted the Swiss National Bank to say it would provide Credit Suisse with liquidity if needed, easing selling pressure.

• On the US inflation front, the producer price index for February released on Wednesday rose 4.6% on the year, or less than the 5.4% forecast, according to Reuters. The figure suggests that inflation is easing and adds to speculation that the Federal Reserve may pause planned interest rate hikes in the coming months, particularly amid failing banks.

• The US consumer price index (CPI) rose 6% from a year earlier in February, down from 6.4% in January, but still well above the Fed’s target of keeping annual inflation below 2%.

• After eight rate hikes since March 2022, US interest rates are now between 4.5% to 4.75%, the highest since October 2007. Analysts at CME Group expect a 54.6% chance of the Fed raising rates by 25 basis points this month. The chance of no rate increase is 45.4%, more than doubling from 20.3% on Wednesday.

• Volatility in U.S. markets this year as traders try to position themselves ahead of action by the Fed has not deterred foreign investors, with net capital inflows in January climbing to a one-year high of $183.1 billion as foreign investors took up long- securities.

• U.S. stock futures rose Thursday morning in Asia, suggesting confidence is returning for trading later in the day. At 09:30 in Hong Kong, Dow Jones Industrial Average futures were up 0.19%. S&P 500 futures rose 0.28% and the Nasdaq Composite Index rose 0.41% higher.

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