Bitcoin, Ether and other cryptocurrencies fell on Friday as threats of another US regulatory crackdown loomed over the digital asset market, threatening to undo the gains of a rally that has sent cryptos higher so far this year.
The price of Bitcoin has fallen 4% in the past 24 hours to below $21,800 after trading near $23,000 on Thursday before news of investigations into crypto platforms by the Securities and Exchange Commission pushed prices down. The biggest digital asset has hovered around $23,000 for much of…
Bitcoin,
Ether,
and other cryptocurrencies fell on Friday as threats of another US regulatory crackdown loomed over the digital asset market, threatening to undo the gains of a rally that has sent cryptos higher so far this year.
The price of Bitcoin has fallen 4% in the past 24 hours to below $21,800 after trading near $23,000 on Thursday before news of investigations into crypto platforms by the Securities and Exchange Commission pushed prices down. The biggest digital asset has hovered around $23,000 for much of the past few weeks – a high where it had consolidated after a 40% rally to start 2023 – and now looks vulnerable to a correction. Ether, the second-largest crypto under the spotlight amid the SEC’s actions, was weaker, falling 6% to below $1,550.
“After showing solid resilience in recent weeks, Bitcoin finally appears to have entered a correction phase after falling nearly 5% on Thursday,” said Craig Erlam, analyst at broker Oanda. “It was never going to just go from strength to strength and this correction will enable us to see how quickly the money flows back in. It should be an interesting couple of weeks.”
Digital assets have largely traded in line with stocks in recent weeks, moving higher with them
Dow Jones Industrial Average
and
S&P 500
amid optimism over the macro outlook for inflation and interest rates, which affect both asset classes. Issues endogenous to crypto are now taking control of market sentiment and spurring a sell-off as traders eye more regulatory threats facing digital assets in the US – the latest risk for cryptos amid a brutal bear market.
Crypto platform Kraken agreed Thursday to pay a $30 million fine to the SEC and end its “staking” service for U.S. customers, apparently confirming fears raised by the CEO of Coinbase Global (ticker: COIN ) that the agency was looking at a prohibition of betting.
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Staking involves traders unlocking tokens – such as Ether – as collateral in a process that both helps a blockchain network, such as Ethereum, operate and provides returns to investors. It stands at the heart of many blockchains other than Bitcoins and is a factor that attracts investors to the space. Therefore, a ban on US retail participation would be a blow to the wider use of Ethereum and similar networks. A US betting ban also bodes poorly for Coinbase, making it easier to bet on a service for which it charges significant fees.
Smaller cryptos, or altcoins, also traded deep in the red on Friday, with
Cardano
down 7% and
Polygon
loses 4%. Memecoins showed much of the same, with
Dogecoin
falls 7% and
Shiba Inu
waste close to 8%.
Write to Jack Denton at [email protected]
