Bitcoin dipped below $22,000 Thursday and was recently down nearly 4% over the past 24 hours amid a wider market decline that largely followed news that crypto exchange giant Kraken had agreed to shut its cryptocurrency-staking operations to settle charges with the U.S. Securities and Exchange Commission (SEC).
The SEC will vote on the settlement at a closed-door commissioner meeting Thursday afternoon. A source close to the matter said CoinDesk that an announcement could come later in the day.
Bitcoin traded at $21,900 recently. BTC was trading at $21,900. Ether (ETH), the second-largest cryptocurrency followed BTC’s lead and traded down 4.3% to $1.569.
Coinbase fell 14% on Thursday’s trading hours. Marathon Digital Holdings (MARA), the bitcoin miner, dropped 13% and MicroStrategy, a major bitcoin acquirer, was also down 10%.
The Kraken news came less than one day after Coinbase CEO Brian Armstrong tweeted “rumors” about the Securities and Exchange Commission (SEC). Armstrong’s tweet triggered a slow decline in BTC support from just below $23,000 to around $22,500. This possible development has been questioned by a number of analysts.
“It is still to be confirmed if these rumors are true. But what is certain is that it would be a huge error from the US perspective as it would result in the rest of the globe getting ahead in the crypto and blockchain technology revolution,” Marcus Sotiriou (market analyst at GlobalBlock), wrote in an email comment.
Many believe BTC will fall to $20,000 support soon as investors worry about stubbornly strong job data and a prolonged continuation of the hawkish U.S. monetary policy, which will slow economic growth. Others believe the current price slump will last for a while and then transition into a new price surge similar to earlier bear markets.
“What we are currently experiencing seems more like the up-and-then sideways market activity which pretty much defined 2019,” Vineeth Bhuvanagiri, Emurgo’s Managing Director, wrote in a note for CoinDesk. Bhuvanagiri stated that the markets had entered a “not only a recovering but an accumulation phase,” which ultimately fed the 2020 bull market.
He said, “I believe we’re more likely to be in a 2019 situation than actual bull markets.”
Mauricio di Bartolomeo is the co-founder and CEO of the Ledn crypto lending platform. He stated that although short liquidations are known to fuel price rises, the recent lack of BTC short liquidations suggests there may be more sideways trading.
According to Coinglass data, investors have liquidated approximately $90 million in BTC long position over the past seven days. This compares to $42 million in BTC short position over the same period.
Bartolomeo stated that there is some leverage to both the downside and the side. Leverage is often what causes these violent moves. For the immediate term, I believe the setup is trading sideways.
BTC lost 60% in 2022 but gained ground in January. Messari’s most recent quarterly report on bitcoin shows that market indicators like “movement in large amounts of BTC to self-custodial wallets” and “growth of daily active addresses” indicate a “potential market bottom” and “a persistence of long-term investor trust.”
“Although bitcoin’s hype has declined, the network has historically enjoyed a resurgence of popularity after periods in doubt,” Messari’s Sami Kassab wrote and Chris Collar reported in the report.
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