Risk markets inlcuding bitcoin (BTC) appear to have had some sense beaten into them, following Wednesday’s comments from Federal Reserve chair Jerome Powell regarding a continuation of monetary tightening.
Traders had been betting on a dovish pivot for weeks, pushing up the S&P 500 index despite plenty of hawkish evidence to the contrary.
But the past two trading sessions have been pretty grim for the benchmark index, and that has been reflected in the crypto markets.
Bitcoin (BTC) fell a brutal 5% yesterday, dragging the BTC/USDT pair all the way down to a three-week low of US$21,800.
There has been some momentum this morning, with the pair returning 0.3% to US$21,850, but there’s a fair chunk of change between the spot price and 23k, which is where the bulls desperately need to carve a consistent support line.
Bears rescind bitcoin (BTC)’s 23k support line – Source: currency.com
The cryptocurrency markets as a whole dipped 4% overnight to bring global market capitalisation down to US$1.02tn.
Ethereum lost 6%, bringing the ETH/USDT pair down to the US$1,550 mark.
Over US$220mln was chalked up in long liquidations, with bitcoin and ether longs responsible for around US$52mln each.
Besides straight market forces, the crypto markets are facing a renewed wave of regulatory scrutiny which could be compressing prices.
Barely hours after Coinbase Global Inc (NASDAQ:COIN) chief Brian Armstrong warned of a potential crackdown on cryptocurrency staking in the US due to securities law violations, rival exchange Kraken announced an immediate cessation of its staking options. The exchange will also have to pay out US$30mln in fines to the Securities and Exchange Commission (SEC).
The staking problem is unlikely to end there; Coinbase shares plummeted nearly 15% on the news as investors fret over the future of the exchange’s own staking service.
Altcoins take a bearish turn
The wider altcoin space shared the pain, with large caps including Cardano (ADA), Polygon (MATIC), Dogecoin (DOGE), Solana (SOL) and Polkadot (DOT) shedding mid-to-high single digits from their market caps.
Further down the scale, mid-tier blockchain networks Fantom (FTM) and Aptos (APT) were among the worst performers, both now having chalked up over 20% in losses across the week.
Funnily enough, given the latest controversy over staking, liquid staking protocol Lido DAO (LDO) has been exceptionally resilient. The Ethereum-based token remains over 20% higher week on week.
Other top risers across the week included SingularityNET (AGIX), The Graph (GRT) and Frax Share (FXS).
Total value locked across all decentralised finance (DeFi) protocols currently sits at US$47.4bn, representing week-on-week losses of 3.5%