- Bitcoin was trading at $26,312.23 around 5:09 a.m. ET after falling below the $27,000 mark on Thursday, according to CoinDesk data. This is the lowest level since March 17.
- Currently, the cryptocurrency market is facing a number of problems, including low liquidity, US regulatory crackdowns on the industry, and macroeconomic headwinds.
- The liquidity situation could worsen further after Bloomberg reported that two major crypto market makers, Jane Street and Jump Crypto, are exiting crypto trading in the United States.
Bitcoin faces many headwinds, including low liquidity that increases volatility. U.S. regulators are also closely monitoring the cryptocurrency industry.
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Bitcoin traded at its lowest level since mid-March on Friday as volatility from low liquidity continued to hit the cryptocurrency market.
Bitcoin was trading at $26,312.23 around 5:09 a.m. ET after falling below the $27,000 mark on Thursday, according to CoinDesk data. This is the lowest level since March 17.
Ether, the second-largest digital currency by market capitalization, also fell on Friday.
Currently, the cryptocurrency market faces a number of problems, including low liquidity, US regulatory crackdowns on the industry, and macroeconomic concerns.
Bitcoin is up about 59% this year, but the price remains volatile as low liquidity exacerbates the ups and downs.
Silkworm research director Clara Medalie said there was a “significant reduction in market depth” for bitcoin.
Market depth refers to the market’s ability to absorb relatively large buy and sell orders. When the market depth is shallow, relatively small orders can move asset prices significantly up and down.
And the liquidity situation could get even worse in the future reported by Bloomberg Cryptocurrency market giants Jane Street and Jump Crypto have announced they are taking a step back from cryptocurrency trading in the US as US regulators continue to crack down on the emerging industry.
“While the trigger for today’s plunge is not yet clear, volatility is high given current liquidity conditions, especially after major market makers Jane Street and Jump Crypto announced they were reducing their crypto exposure. is expected,” Medalley said.
Liquidity has become a major issue for the cryptocurrency market since the closure of Silvergate and Signature Bank, two major platforms that people used to enter the cryptocurrency market.
U.S. regulatory scrutiny of the digital currency industry has increased since the collapse of crypto exchange FTX last year.
In March, the U.S. Securities and Exchange Commission warned U.S. cryptocurrency exchange Coinbase for possible violations of securities laws. Coinbase CEO Brian Armstrong said the company is preparing for a multi-year legal battle with the SEC.
Meanwhile, in March, the Commodity Futures Trading Commission accused crypto exchange Binance of violating trading rules.
The crypto industry is at war with U.S. regulators, accusing the SEC and the U.S. government of not setting clear rules.
Meanwhile, the Bitcoin network itself has faced congestion in recent days, forcing Binance to temporarily suspend Bitcoin withdrawals last week. Bitcoin transaction fees have surged this week and are trending downwards, but still at high levels. The original Bitcoin network was not designed to handle high volumes of transactions.
“Bitcoin’s $30,000 attempt falters in the triple whammy of blockchain congestion issues, liquidity constraints from the downsizing of top market makers Jane Street and Jump Crypto, and ever-circulating regulators. I did,” says Antoni Trenchev. – the Nexo founder told CNBC in an email on Friday.
– CNBC’s Tanaya Macheel contributed to this report.
