Bitcoin stalls below $28,000 as banking crisis spills over into crypto market ⋆ ZyCrypto
Bitcoin continued to trade sideways on Friday, teetering in the $28,000 zone after a strong rally last week.
At press time, the largest cryptocurrency by market cap was trading at $27,762, up 4.60% over the past seven days, according to data from CoinMarketCap. Ether also showed low volatility, trading at $1,761, down about 0.30% in the past week. In addition, most other cryptocurrencies witnessed mild losses except for XRP, Cardano and Solana, up 12.56%, 4.12% and 4.11% respectively in the last seven days.
Earlier this week, Bitcoin rose as high as $28,840 – a key psychological area – after the US government offered to cover depositors following the collapse of three major cryptocurrency banks, Silicon Valley Bank, Signature and Silvergate. However, the collapse appears to have motivated regulators to further tighten the noose around banks with crypto ties, putting the crypto market under immense pressure.
“There are troubling reports of crypto companies closing their bank accounts, often without notice and without explanation. They have also struggled to open new accounts. This troubling trend suggests regulators are trying to cut crypto out of the banking system entirely.” said Jake Chervinsky, Chief Policy Officer of The Blockchain Association.
The US Securities and Exchange Commission (SEC) has also continued to double down on its crypto enforcement actions. On Thursday, the regulator issued a new message to investors, urging them to exercise caution when investing in crypto assets.
It further noted that “proof of reserves” means nothing, hinting at further enforcement action against crypto exchanges and stablecoin issuers. At the same time, Coinbase, the second largest crypto exchange by daily volume, also received the Wells Notice from the SEC notifying the agency of its intention to sue for various securities violations, ZyCrypto reported.
That said, while the purging of crypto by regulators is not yet widespread as such on Bitcoin’s price, it has sapped liquidity for pioneering cryptoassets.
According to Conor Ryder, a researcher for France based at chain analysis firm Kaiko, liquidity in crypto has worsened following the banking scare this month, with BTC’s market depth painting a “warning picture”.
“BTC liquidity has fallen to 10-month lows as market participants lose access to USD payment rails“, Ryder tweeted on March 23, adding, “US exchanges have been hardest hit due to the closure of USD payment rails and crypto banks. Market makers in the region are facing unprecedented challenges to their operations.”
However, on a more optimistic note, the pundit highlighted that BTC volumes had at least recovered from the multi-year lows of late 2022. “With volumes picking up, just wait for liquidity to improve for a sustained uptrend in crypto. Otherwise, be prepared for volatility.” he added.
