Bitcoin, Ether drop on liquidity concerns, Polkadot gains

Bitcoin fell on Thursday morning in Asia to trade around the US$27,500 mark, after briefly breaching US$28,000 on Wednesday as U.S. inflation slowed. Liquidity is becoming a concern after major market makers Jane Street Group and Jump Crypto quit cryptocurrency trading in the U.S. citing unfavorable regulations. Ether led the losers in the top 10 non-stablecoin cryptocurrencies, while Pokadot led the winners. U.S. equity futures traded higher as inflation eased in April, adding to speculation the Federal Reserve may pause its interest rate hikes in June.

See related article: Hong Kong will have ‘tight’ crypto regulation, says HKMA chief Eddie Yue

Bitcoin, Ether lose ground

Bitcoin dropped 0.60% to US$27,554 in the 24 hours to 08:30 a.m. in Hong Kong, according to CoinMarketCap data, logging a weekly loss of 5.24%. 

The world’s largest cryptocurrency briefly breached the US$28,000 ceiling on Wednesday as crypto markets rallied on a slower U.S. inflation rate, but soon fell back amid concerns about network congestion and liquidity.

Jane Street Group and Jump Crypto, two leading market makers, will quit digital asset trading in the U.S. as regulators crack down on the industry, according to a Bloomberg report citing unnamed sources. 

“After the collapse of several crypto-friendly banks and FTX it seems like the SEC (regulator) is unsure what leg to stand on and for sure the stance has become more hostile to cryptos and the entire financial and technical ecosystem surrounding it,” Mikkel Morch, chairman and non-executive director at digital asset investment fund ARK36, said in an email.

As of 08:30 a.m. in Hong Kong, investors liquidated US$41.28 million of Bitcoin positions, almost 75% of which were long positions – or bets that the price of Bitcoin would rise, according to market data tracker CryptoMeter.io.

Ether fell 0.84% to US$1,837, down 3.49% for the week. The token neared US$1,900 on Wednesday before falling back to as low as US$1,795.

Other top 10 non-stablecoin cryptocurrencies traded mixed, with Polkadot’s Dot token leading the winners with a gain of 1.91% to US$5.45. However, it’s down 5.43% for the week. Web3 Foundation, the organization behind the Polygon blockchain, testified before the U.S. Congress on Wednesday on digital asset regulations, calling for a clearer rules of the road.

The total crypto market capitalization dipped 0.30% in the past 24 hours to US$1.14 trillion. The total trading volume rose 43.61% to US$45.84 billion.