Monday saw pressure on cryptocurrency values ahead of important inflation data and the newest regulatory action in the U.S.
According to data from CoinMarketCap, the overall market value of the cryptocurrency market dropped under $1 trillion on Monday afternoon, marking the first time in the previous three weeks that it had done so.
The New York Department of Financial Services (NYDFS), the latest regulatory action in what has already been a busy year for measures against cryptocurrency companies, ordered stablecoin issuer Paxos to halt issuing new units for Binance's BUSD stablecoin early on Monday.
The de-banking of the [crypto] business, the elimination of stablecoins, and the clarification of unregistered securities, according to Caitlin Long, founder and CEO of Wyoming-based crypto custodian Custodia Bank, was the result of recent events, she said on Monday on Yahoo Finance Live.
On January 27, Long's company received a denial about its application to join the U.S. Federal Reserve system as a member bank.
In addition to governmental initiatives, investor interest in crypto assets has waned recently following a strong rally at the beginning of 2023.
The first half of the year doesn't look promising for risk assets like equities and cryptocurrencies given the strength of economic indicators like inflation and the labor market, which suggest "higher interest rates for longer," according to Jan van Eck, CEO of global asset manager VanEck, speaking to Yahoo Finance.
According to Christopher Newhouse, a crypto options trader for the industry investment firm GSR, expectations in the cryptocurrency options market are less optimistic than they were last month with the release of the January U.S. consumer price index scheduled for tomorrow.
According to Newhouse of the bitcoin options market, "there has been elevated volumes, common long side liquidations, and a substantial quantity of calls sold at the $25,000 price, which may operate as a powerful level of resistance" before this CPI release.
According to Newhouse, interest in "downside protection," or puts, for both bitcoin and ether, has increased during the past week. He continued, pointing out "bearish regulatory concerns" and said that positions are "negative across the board."
On Monday afternoon, the price of bitcoin (BTC-USD) decreased by around 1% to trade close to $21,600.
The SEC has filed 4 enforcement proceedings against cryptocurrency firms since the year's beginning, including a $30 million settlement with American exchange Kraken last week. Kraken promptly ended its staking program for consumers in the United States as part of the settlement.
Following this information, shares of rival exchange Coinbase Global (COIN) have kept falling. On Monday, the Nasdaq gained almost 1.5% while Coinbase's stock declined 1.2%. The share price of Coinbase has decreased by nearly 24% during the past five trading days.
Paul Grewal, chief legal officer at Coinbase, claimed that the company's program is "fundamentally different" from the one Kraken provided in an interview with Yahoo Finance on Thursday. He also stated that the business has no intentions to discontinue its own program.
Staking brought Coinbase $63 million in revenue during the most recent quarter. According to expert forecasts compiled by Bloomberg, Coinbase's staking program was previously expected to expand and contribute 12.5%, or $347 million, of the company's annual income by 2023.
Sources: MSN & Yahoo finance