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Bitcoin (BTC-USD) will end the week 7.7% lower as sentiment was hit by renewed macroeconomic concerns and a regulatory scrutiny after the US SEC suspended cryptocurrency exchange Kraken’s staking service.
Broader Financial Markets were weighed down by increasingly hawkish comments from Federal Reserve speakers in response to recent data signaling a stubbornly resilient labor market.
Meanwhile, Kraken ended its crypto asset staking-as-a-service program and will pay $30 million to settle SEC fees. The regulator claimed Kraken failed to register its staking program, exposing investors to risk with minimal protection.
“Since the SEC hasn’t even approved a bitcoin spot ETF to date, it seems unlikely that they would have approved a slightly more obscure product like staking,” said Markus Thielsen, head of research at Matrixport. “While SEC enforcement is negative for the industry, it has barred US crypto users from participating in the innovation. The winners will likely be vendors in Asia.”
Coinbase (COIN) CEO Brian Armstrong warned that the SEC may want to abolish retail crypto staking entirely.
Bitcoin (BTC-USD) stayed within $21.55K-$23.68K this week, blocking its rally this year. The global crypto market cap is currently in the red at $1.01 trillion 0.7% via Thursday, according to CoinMarketCap.
Regulatory Updates
- Fed Board Governor Christopher Waller called crypto a “speculative asset, like a baseball card.” He also warned that if the price of cryptos goes to zero, “don’t expect taxpayers to socialize your losses.”
- But Philadelphia Fed President Patrick Harker said that despite the recent bear market, cryptos will likely remain in demand.
- Meanwhile, the SEC warned investors that crypto investments in some self-directed IRAs could be unregistered securities.
The contagion continues
- Crypto exchange LocalBitcoins is shutting down after over 10 years of operation due to the “very cold crypto winter”.
- Crypto ATM operator Coin Cloud filed for Chapter 11 bankruptcy protection with estimated liabilities of up to $500 million. The company owes over $100 million to insolvent crypto lender Genesis, its largest creditor.
- Digital Currency Group began selling stakes in trusts operated by its Grayscale Investments unit at a deep discount as it seeks to raise funds to repay creditors of its Genesis unit.
- Ishan Wahi, a former Coinbase (COIN) executive, reportedly pleaded guilty to two counts of conspiracy to commit wire fraud in the first crypto insider trading scheme.
Notable news
- Hut 8 Mining (HUT) will merge with US Bitcoin in an all-stock merger of equals that is expected to give the combined company a market cap of ~$990M. The news sent crypto mining stocks lower as further consolidation in the industry is expected.
- Deutsche Bank’s asset management unit, DWS Group, is reportedly considering taking minority stakes in two crypto firms to spur growth.
- PayPal has halted stablecoin work amid reports that New York regulators are investigating its key partner in the project.
bitcoin price
- Bitcoin (BTC-USD) is down 0.7% at 19:00 ET to $21.64K and Ether (ETH-USD) fell 2.1% to $1.51,000.
- SA contributor Ryan Wilday said Bitcoin’s (BTC-USD) rally over the past month is promising, but bulls still have more to do to confirm that the downtrend that began in 2021 is over.
Crypto-related stocks that closed lower on Friday: CleanSpark (CLSK) -8.8%Hut 8 Mining (HUT) -8.2%Bit farms (BITF) -6.6%. Coin Base (COIN) -4.3%Riot Platforms (RIOT) -2.5%.
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