Bitcoin edged lower in Friday morning trading in Asia to below the US$29,000 mark following rate hikes from the European Central Bank (ECB). Ether fell below US$1,900 while most other top 10 non-stablecoin cryptocurrencies logged losses. Solana’s SOL led the losers. U.S. equity futures traded higher after Wall Street slid on Thursday amid renewed worries about the U.S. banking system and a potential recession in the economy.

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Bitcoin dips, Solana leads losers

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Image: Envato Elements

Bitcoin edged down 0.40% to US$28,949 in the 24 hours to 09:00 a.m. in Hong Kong, according to CoinMarketCap data, dipping 1.88% for the week. The world’s largest cryptocurrency has added over 70% from year to date but is down about 6.6% from its 30-day high of US$31,005 hit on April 14.

Bitcoin and other cryptocurrencies dipped as investors digested the recent interest rate hikes in the U.S. and Europe, which “could add more pressure on cryptocurrencies over the short term as some investors turn to more caution and as safer assets like treasury become more appealing,” said Denys Peleshok, Head of Asia at CPT Markets, in an emailed statement shared with Forkast.

“However, over the medium term, crypto markets could benefit from the expected pause and eventual decline in interest rates (in the U.S.),” said Peleshok, who projected the Federal Reserve’s changing rhetoric could fuel more risk-taking by investors.

Fed Chairman Jerome Powell noted his agency is prepared for further rate hikes if “greater monetary policy restraint is warranted,” sending mixed signals to the markets.

Ether dropped 1.21% to US$1,880, holding a weekly loss of 1.55%. 

Most other top 10 non-stablecoin cryptocurrencies also traded lower, with the exception of XRP and Tron, which added 0.12% and 0.48% in the past 24 hours.

Solana’s SOL led the losers, falling 2.45% to US$21.80 and trading down 2.88% for the week.

The total crypto market capitalization edged down 0.71% in the past 24 hours to US$1.19 trillion. The total trading volume dropped 23.57% to US$32.38 billion.

Ethereum NFT sales fall

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

In the non-fungible token (NFT) market, the Forkast 500 NFT index dropped 0.74% to 3,640.20 in the 24 hours to 09:00 a.m. in Hong Kong, falling 1.83% for the week.

The Ethereum blockchain saw its NFT sales volume fall by over 27% in the past 24 hours, according to data from CryptoSlam, amid increasing average transaction fees on Ethereum, which stood at US$16.74 on May 4, according to data from blockchain intelligence platform IntoTheBlock, an increase from US$3 at the beginning of the year. 

According to NFT data aggregator CryptoSlam, Over US$635 million of Ethereum NFT sales in April were wash trades, which made up nearly 60% of all NFT trades on the blockchain for the month. Wash trades refer to an investor acting as both the buyer and seller of a financial instrument to generate misleading trading volume and potentially manipulate prices. The practice is illegal in U.S. securities markets.

The current wash trades on Ethereum are primarily driven by investors farming Blur marketplace’s points, the platform’s loyalty system that incentivizes users’ bids and listings of NFTs, according to CryptoSlam. 

“Wash trading is expected to continue and possibly increase on Ethereum as traders use liquidity-providing tools like BenDAO, NFTfi and Blur’s new Blend lending protocol to pursue more platform rewards in Blur’s Season 2,” said Yehudah Petscher, an analyst at CryptoSlam, in a commentary.

U.S. banking woes continue

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European Central Bank headquarters in Frankfurt, GermanyImage: Getty Images

U.S. stock futures traded higher as of 9:00 a.m. in Hong Kong. The Dow Jones Industrial Average futures edged up 0.24%. The S&P 500 futures gained 0.40%. And the Nasdaq Composite futures added 0.51%.

The three indexes closed lower on Thursday, driven by mounting worries in the U.S. banking system. PacWest Bancorp., a California-based bank, saw its share price fall over 50% on Thursday after the lender reportedly considered strategic options, including a sale, fueling a slump across multiple regional banks.

“The continuing issues in the banking sector could fuel concerns about traditional finance’s ability to withstand financial shocks and could push more investors toward digital assets. The crypto market has already benefited from a surge in inflows during previous bank failures this year and could continue to do so if new collapses emerge,” said Peleshok from CPT Markets.

On the economy front, the U.S. initial jobless claims rose by 13,000 to 242,000 in the week ending April 29, beating the expectation of 240,000 and pointing to a slowdown in the labor market, Bloomberg reported on Thursday.

Given the “restrictive interest rates, tightening credit from the regional banking turmoil and weakness in several leading indicators”, the U.S. economy could enter a mild recession in the third or fourth quarter of 2023, according to a report by Independent Commodity Intelligence Services on Thursday.

The Fed’s next move on interest rates is due on June 14. Analysts at the CME Group now expect a 99.6% chance the Fed will keep the rates unchanged at 5% to 5.25%, and a 0.4% chance for a 25 basis point rate cut.

Meanwhile, in Europe, the ECB decided on Thursday to raise its interest rate by another 25 basis points to 3.25% and signaled more monetary tightening to come.

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