The cryptocurrency market has been hit by a downturn, with leading currencies Bitcoin and Ether suffering losses on Thursday. Bitcoin hovered around the $27,500 level, having momentarily surpassed $28,000 on Wednesday, influenced by a slowing U.S. inflation rate. The decrease arrives amidst growing liquidity worries following the withdrawal of major market makers Jane Street Group and Jump Crypto from U.S. cryptocurrency trading, due to restrictive regulatory conditions.
Over the last 24 hours, Bitcoin experienced a 0.60% dip to $27,554, resulting in a weekly loss of 5.24%, as reported by CoinMarketCap. Despite an initial rally in the wider crypto markets following the news of slower U.S. inflation, this was short-lived due to fears about network congestion and liquidity problems.
Important players in the trading sphere, Jane Street Group and Jump Crypto, announced their departure from U.S. digital asset trading, coinciding with increased regulatory scrutiny on the crypto sector.
In the last 24 hours, investors liquidated Bitcoin positions worth $41.28 million, with roughly 75% being long positions, according to market tracker CryptoMeter.io. This indicates a bearish market sentiment, with long-term investors seemingly reducing their holdings.
Ether, the cryptocurrency with the second-largest market capitalization, also experienced a decline, dropping 0.84% to $1,837, making a weekly loss of 3.49%.
The only gainer among the top 10 non-stablecoin cryptocurrencies was Polkadot’s Dot token, which increased by 1.91% to $5.45. However, it is still down by 5.43% for the week. On Wednesday, the Web3 Foundation, the organization behind the Polygon blockchain, made a case for more precise digital asset regulations in front of the U.S. Congress.
In the non-fungible token (NFT) sector, the Forkast 500 NFT index dipped 0.67% to 3,440.57, resulting in a weekly loss of 6.15%. Notably, Ethereum-based NFT collection Milady Maker saw a surge in sales after Elon Musk, CEO of Twitter and Tesla, tweeted an image featuring the NFT.
Even amidst the downturn, U.S. equity futures traded upwards, fuelling speculation that the Federal Reserve might postpone its interest rate hikes in June. The slowing inflation rate in the U.S in April, the lowest in two years, hints that the Federal Reserve could delay additional rate increases.
However, with President Joe Biden cautioning about a potential federal government default triggering a global recession, financial markets are shrouded in uncertainty. As the Federal Reserve meeting on June 14 approaches, observers will be keenly watching the central bank’s next steps on interest rates.
In conclusion, this week’s cryptocurrency market downturn underscores the industry’s volatility and regulatory hurdles. However, as the broader financial market also grapples with its uncertainties, investors will be closely monitoring these developments in the weeks ahead. A prudent approach and a well-diversified portfolio may be the key to navigating these choppy waters.
©traders-news.online
