Bitcoin fell to near the US$20,000 support line in Friday morning trading in Asia, while Ether and all other top 10 non-stablecoin cryptocurrencies slid to cap off a week of mostly red ink. Crypto prices followed equities lower as U.S. Federal Reserve Chair Jerome Powell this week warned interest rates may need to go higher than expected to curb inflation. The insolvency of crypto bank Silvergate on Wednesday added more downward pressure to crypto prices. Shiba Inu led the losers. Another negative is the increasingly public conflict between U.S. regulators on whether to define crypto assets as securities or commodities.
See related article: CFTC chair calls Ethereum a commodity, in contrast to SEC chair Gensler’s position
Fast facts
- Bitcoin slid 7.41% in the past 24 hours to US$20,127 as of 09:00 a.m. in Hong Kong, according to CoinMarketCap data, reaching a low for the month. The price of the largest cryptocurrency has fallen 14.10% in the past seven days, but is still up over 20% from the start of the year.
- Ether fell 7.17% to US$1,426, posting a weekly loss of 13.25%.
- Shiba Inu lost 8.89% in the 24 hours for a seven-day loss of 16.94%. Litecoin replaced the meme token as the 10th largest non-stablecoin cryptocurrency but did not fare much better, falling 8.67% to US$75.63, for a loss of 20.35% for the past week.
- Silvergate Bank said on Wednesday that the U.S.-based crypto financial services company will liquidate, triggering a price slump that has wiped out over US$60 billion from the crypto market capitalization in the past 24 hours.
- The total crypto market capitalization dropped 6.15% in the past 24 hours to US$934.43 billion. Total trading volume in the period rose 33.47% to US$59.39 billion.
- Adding to crypto investors’ concerns, New York State Attorney General Letitia James filed a lawsuit against crypto exchange Kucoin on Thursday, which alleged that Ether and some other crypto assets are securities and should be registered as such. This was the first time that Ether was claimed to be a security by a U.S. attorney general in court. Other U.S. regulators are in public dispute about whether Ether is a commodity or a security, an argument that will affect the status of scores of crypto tokens.
- Following Silvergate’s failure, cryptocurrency exchange Blockchain.com said on early Friday it was winding down its U.K.-based asset management arm, adding to a raft of retrenchments across the industry since the collapses of the Terra-Luna stablecoin and the FTX exchange last year.
- U.S. equities slid on Thursday. The Dow Jones Industrial Average closed 1.66% lower, the S&P 500 dropped 1.85%, and the Nasdaq Composite Index fell 2.05%.
- Fed chair Powell said in testimony on Capitol Hill this week that higher-than-expected interest rates might be needed to curb inflation, depending on the latest economic readings. One data point out on Friday is the February employment report, with analysts forecasting 225,000 new jobs added and a yearly increase in average hourly wages of 4.8%, according to CNBC. If the numbers are as expected, it would support the Fed’s view that inflation remains a problem in the economy.
- Interest rates in the U.S. are between 4.5% to 4.75%, the highest since October 2007. Analysts at the CME Group predict a 60.9% chance the Fed will raise rates by 50 basis points this month, down from the 78.6% prediction on Thursday. They forecast a 39.1% chance for a 25-basis-point raise, a sharp reversal from the majority view last month.
- BlackRock, the world’s largest asset manager, expects rates may peak at 6% this year and remain there for an extended time to get inflation back to the central bank’s preferred range of 2%, CNBC reported, citing BlackRock’s chief investment officer of global fixed income Rick Rieder.
- The U.S. annual inflation rate is 6.4% for the 12 months ended January 2023, according to Labor Department data published Feb. 14. The next inflation update is scheduled for March 14 at 8:30 a.m. Eastern Standard Time.
See related article: Crypto bank Silvergate to close, return all deposits; becomes latest victim of 2022 crypto turmoil