Bitcoin is having its worst week since November as an equity selloff, fear over higher interest rates and an escalating US regulatory crackdown on crypto combine to hurt investor sentiment.
The largest token fell as much 3.2% on Friday, breaking below $20,000 for the first time since January, after falling more than 8% on Thursday. Smaller coins like Ether, Solana and Cardano also added to losses.
A rout in US bank stocks on Thursday stoked concerns that rising borrowing costs are creating a treacherous economic and investing outlook. In New York, the state regulator sued KuCoin, a popular crypto exchange, and in the process claimed in court that second-largest token Ether is a security. The US Securities & Exchange Commission also contends that many cryptocoins are securities, a designation that would potentially make them harder to trade.
“The selloff in cryptocurrencies appears to be largely equity-market led,” said John Toro, head of trading at digital-asset exchange Independent Reserve. He added that the wind-down of crypto-friendly bank Silvergate Capital Corp. and President Joe Biden’s proposal for a series of tax increases on investors and top-earning Americans contributed to the downdraft.
Bitcoin has shed about 13% so far this week, the most since a 23% weekly tumble in November amid the collapse of Sam Bankman-Fried’s FTX platform.
Among smaller tokens, some of the spotlight fell on HT, the native token of the Huobi exchange. HT on Thursday rapidly halved in price at one point before paring some of the losses. It has fallen about 21% in the past 24 hours.
China-born crypto mogul Justin Sun, an adviser to Huobi, indicated a $100 million fund had been set up to improve the platform’s liquidity.
We deeply apologize for the impact of the leveraged liquidation on the market caused by a few users, and in order to further improve the multi-currency liquidity of the @HuobiGlobal platform, we will set up a liquidity fund with an investment of 100 million US dollars.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 10, 2023
Sentiment in digital-asset markets as a whole has taken a knock from the demise of Silvergate’s payments platform for crypto firms, as well as Chair Jerome Powell’s stance that the Federal Reserve is likely to take rates higher than previously anticipated.
“Crypto native themes, running in parallel with choppier equity markets, is the perfect recipe for volatility,” said Edmond Goh, head of trading at B2C2.
Bitcoin has now dipped below its 200-day moving average, which for some analysts could portend more falls.
The token will likely trade in the lower end of a range from about $15,500 to $25,000, said Tony Sycamore, market analyst at IG Australia Pty. “Risk sentiment has really deteriorated this week,” he said. “Powell was more hawkish than what markets were expecting.”
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