Bitcoin falls below $22,000 as Kraken deal to shut down crypto staking operations spooks investors
Bitcoin fell below $22,000 on Thursday and was recently down nearly 4% over the past 24 hours amid a major market decline that largely followed news that crypto exchange giant Kraken had agreed to shut down its cryptocurrency venture to settle case with the US Securities and Exchange Commission (SEC).
The SEC will discuss and vote on the settlement during a closed commissioner meeting Thursday afternoon, and an announcement could come later in the day, a source familiar with the matter told CoinDesk.
Bitcoin recently traded at $21,900. Ether (ETH), the second largest cryptocurrency, followed BTC’s trend, recently trading down 4.3% to $1,569.
Crypto-related stocks also struggled with Coinbase recently down 14% during midday Thursday, bitcoin miner Marathon Digital Holdings ( MARA ) down 13%, MicroStrategy ( MSTR ), a major bitcoin buyer, down 10%.
The Kraken news came less than a day after Coinbase CEO Brian Armstrong tweeted that the company had heard “rumors” that the Securities and Exchange Commission (SEC) wanted to get rid of US retail crypto betting.” Armstrong’s tweet led to a slow decline late Wednesday, early Thursday, which sent BTC from its previous support just below $23,000 to around $22,500. A number of analysts have been concerned about this possible development.
“It remains to be seen whether these rumors are true, but what is clear is that it would be a huge mistake from an American perspective, as it would cause the rest of the world to move forward in the important crypto and blockchain technology revolution.” Marcus Sotiriou, market analyst at digital asset broker GlobalBlock, wrote in an emailed comment.
Many believe BTC will retreat to $20,000 support in the near future as investors also worry about stubbornly strong jobs data and an extended continuation of hawkish US monetary policy that will hamper economic growth. But others say the current lull will be temporary and enter another price rally, similar to trends in previous years when markets emerged from other bear markets.
“What we’re experiencing now seems more like the up and then sideways market activity that largely defined all of 2019,” which followed a severe price crash, Emurgo CEO Vineeth Bhuvanagiri wrote in a note to CoinDesk. Bhuvanagiri wrote that markets had entered “not only a recovery phase, but also an accumulation phase” that ultimately helped fuel the 2020 bull run.
“I think we’re more likely in a 2019 scenario than an actual bull market,” he added.
Mauricio Di Bartolomeo, co-founder of crypto-lending platform Ledn, said in an interview with CoinDesk that while short liquidations usually bring price increases, a recent absence of BTC short liquidations suggested there “may be more sideways trading again.”
Data from crypto data platform Coinglass showed that investors had liquidated about $90 million in BTC long positions compared to about $42 million in BTC short positions over the past seven days.
“There is modest leverage taken to both the downside and the upside,” Bartolomeo said. “Usually what creates the violent moves is exploited. So right now I think the setup is just acting sideways for the near term.”
BTC fell around 60% in 2022, but regained lost ground during a triumphant January. Recent market indicators such as “the movement of large amounts of BTC from centralized exchanges to self-custodians” and “the growth of daily active addresses and transactions” suggest “a potential market bottom” and “a sustained long-term investor confidence,” according to Messari’s latest quarterly report on bitcoin.
“Although the hype surrounding bitcoin has subsided, the network has historically experienced a resurgence in popularity after periods of doubt,” Messari’s Sami Kassab and Chris Collar wrote in the report.
