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Recent news from the crypto industry indicates a downturn in crypto prices on Thursday. Investors remain cautious as two of the largest institutional liquidity providers in the US have reportedly scaled back their involvement in crypto-trading businesses. Bitcoin tumbled by almost 4%, now valued at around $26,400, while Ether traded at $1,773.91.
Market makers Jane Street and Jump Crypto are allegedly taking a step back from crypto trading in the US amidst a crackdown on the crypto industry by the country's regulators. A joint statement from the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, released in late February, warned banks of the liquidity risks associated with banking crypto firms.
David Wells, CEO of Enclave Markets, cautions that the next price actions will involve significant volatility. With reduced liquidity provided by larger market makers, price stability will be impacted, making the market more vulnerable to frequent price gaps up and down.
Bitcoin began its decline when it hit the $30,000 level a month ago, marking the first time since June. Its ability to break higher since then has been challenging. It has been fluctuating between the upper part of the $26,000 level and that threshold ever since. Nevertheless, investors appear unfazed by these downtrends.
The closure of Silvergate and Signature Bank has also been a prevalent theme, leading to significant illiquidity in the crypto market. Crypto analysts have been closely monitoring the crucial $25,200 level before expressing concerns about a more substantial drop. To many analysts, if the $25,000 support line fails, it may lead to a return to $19,000 or even less, reaching the last strongest support zone seen since November 2022 after the FTX fallout.
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