Crypto Market Struggles with Regulatory Developments and Economic News
The crypto market is facing a challenging environment as the U.S. Securities and Exchange Commission (SEC) has cracked down on crypto services. Last week, the SEC fined Kraken exchange US$30 million and ordered it to stop its crypto staking services. Additionally, the New York State Department of Financial Services ordered stablecoin issuer Paxos to stop minting the BUSD stablecoin. As a result, bitcoin shifted from flying high above $25,000 to sinking to $23.6k over the course of Thursday.
Kraken, a regulated exchange, has been ordered to pay a $30 million penalty and discontinue its U.S. service without delay. The process of staking involves the locking of tokens over a specified period of time to help maintain the functioning of a blockchain. With liquid staking, users can benefit from decentralized finance (DeFi) services, such as lending and borrowing, by obtaining a derivative token that represents the amount of tokens they have locked. The SEC's statement highlights a lack of transparency from Kraken. The SEC seems to be concerned about fund flow: Is ether deposited into Kraken intended for staking really going to staking? Is it being lent out?
The global cryptocurrency market capitalization decreased sharply, reaching a low of $1.09 trillion, with a decline of 3% over the last 24 hours. Total trading volumes rose by 13%, reaching $81.11 billion. Due to rising Bitcoin and Ether prices, many crypto projects are delaying their token launch plans due to an ‘Alameda gap', which is caused by a lack of liquidity.
Research conducted by Binance has revealed that a considerable percentage of ETH holders who participated in staking on Ethereum's Beacon Chain in the last three years are making a profit, while the rest are in the red. Despite the possibility that Bitcoin may dip to $20,000 or lower, there is still a positive outlook on the leading cryptocurrency. As Asia started the working week, the CoinDesk Bitcoin Price Index (XBX) fell to $21,750 and ether is down 1.8% to $1,514.
The crypto market is digesting regulatory developments as well as upcoming economic news. Japan's Gross Domestic Product (QoQ) and United Kingdom Claimant Count Change (Jan) and ILO Unemployment Rate (Dec) will be released at 10:50 p.m.
0. “Markets: Bitcoin slips back below US$24,000; equities slide” Forkast News, 17 Feb. 2023, https://forkast.news/headlines/bitcoin-below-us24000-inflation-equities/
1. “Crypto Price Today: Bitcoin below $24,000; Shiba Inu, Avalanche, Solana drop 5% each” Business Today, 17 Feb. 2023, https://www.businesstoday.in/crypto/story/crypto-price-today-bitcoin-below-24000-shiba-inu-avalanche-solana-drop-5-each-370563-2023-02-17
2. “First Mover Asia: Bitcoin might test $20k as it looks for support” FXStreet, 13 Feb. 2023, https://www.fxstreet.com/cryptocurrencies/news/first-mover-asia-bitcoin-might-test-20k-as-it-looks-for-support-202302130119
3. “First Mover Asia: Bitcoin Might Test $20K as It Looks for Support” Yahoo Life, 13 Feb. 2023, https://www.yahoo.com/lifestyle/first-mover-asia-bitcoin-might-005850418.html
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