Amid US regulatory action and the recent collapse of crypto-friendly banks, the lack of liquidity has become a major issue in the market at present.
Bitcoin, the world’s largest cryptocurrencyB T c) continues to face more and more selling pressure as US regulatory action progresses. In the last 24-hours, BTC price has declined by more than 2.98% and is currently trading at a price of $26,654 with a market cap of $516 billion.
The latest decline in bitcoin price coincided with a market-wide correction, with the entire crypto market cap falling to $1.1 trillion. Along with BTC, altcoins have also entered a correction of similar magnitude.
The world’s second largest crypto Ethereum (ETH) is down 3.31% and is trading at $1,769 with a market cap of over $212 Billion. In addition, altcoins such as Polygon (MATIC), Polkadot (DOT), and others have also corrected up to 3% more as of press time.
US regulatory action has recently forced more crypto firms out of the market. Earlier this week, two of the world’s top market making firms – Jane Street Group and Jump Crypto – announced a pullback from the US market, citing regulatory uncertainty and difficulty in doing business.
Although both these firms announced their exit from the US market, they will continue their operations in the international market. However, as we know, the US is the largest market when it comes to crypto liquidity. David Wells, CEO of Enclave Markets Said CNBC:
“In general, we are going to see large swings in price both ways because so many large market makers have reduced providing significantly. Large market makers provide greater stability in prices due to the liquidity they provide. produce,” he said. “You’ll see gaps up and down more often since the order book is thinner in general.”
US regulatory crackdown intensifies
Following the collapse of crypto exchange FTX in November 2022, US regulatory action has intensified. On the other hand, regulators have also blamed the recent banking crisis in the US on the crypto market.
Earlier in February this year, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint warning to banks on the risks associated with banking crypto firms.
Regulators are also going after some of the top crypto exchanges, including giants like Coinbase and Binance. Earlier this week, crypto exchange Bittrex declared bankruptcy amid strong regulatory action. seconds,
Following the closure of crypto-friendly banks such as Silvergate Capital and Signature Bank, there has been a significant increase in liquidity in the market. Bitcoin is facing selling pressure after a strong rally to $30,000 last month. It’s still trading at over 65% year-to-date gains.
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
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