Crypto Market Daily Highlights: ETH Avoids an SEC and Fed-Fueled Slide

Key Insights:

• It was a mixed Thursday session for the crypto top ten, with ETH bucking a bearish trend.
• US economic indicators delivered late support but failed to distract investors from rising regulatory risk.
• The crypto market cap fell by $5.67 billion, ending the day at $1,049 billion.

It was a mixed session for the crypto top ten on Thursday. ETH bucked a bearish trend, while MATIC led the way down. The mixed session left BTC at sub-$24,000 for the first time in seven sessions.

US economic indicators and the NASDAQ Composite Index provided afternoon support. In Q4, the US economy expanded by 2.7%, down from a prelim 3.2%. Economists forecast growth of 2.9%. However, labor market conditions continued to tighten, with initial jobless claims falling from 195k to 192k. Economists forecast an increase to 200k.

The NASDAQ Composite Index rose by 0.72% in response to the numbers and corporate earnings.

However, the NASDAQ failed to deliver a bullish crypto session, with increasing regulatory scrutiny weighing on investor appetite.

Crypto Scrutiny Tests Buyer Sentiment

On Thursday, the US Federal Reserve released a statement detailing the risks of dealing in cryptos and crypto-related assets. Highlighting liquidity risks related to funding sources from crypto-related entities, the Fed said,

“Certain sources of funding from crypto-asset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows.”

The Fed joined the SEC in its focus on stablecoins, stating,

“The stability of such deposits (stablecoin-related reserves) may be linked to demand for stablecoins, the confidence of stablecoin holders in the stablecoin arrangement, and the stablecoin issuer’s reserve management practices. Such deposits can be susceptible to large and rapid outflows stemming from, for example, unanticipated stablecoin redemptions or dislocations in crypto-asset markets.”

With the US Department of Justice, the SEC, and the CFTC ramping up crypto oversight activities, the IMF also shared its view on the digital asset space. On Thursday, the IMF released a paper titled Elements of Effective Policies for Crypto Assets.

According to the paper, the IMF aims to ‘address questions by Fund members on how to respond to the rise of crypto assets and the associated risks.’

With the crypto market facing increased scrutiny, news of the SEC and the New York Department of Financial Services (NYDFS) objecting to the Binance.US acquisition of Voyager was also bearish. Binance.US plans to acquire Voyager contributed to easing contagion risk at the end of 2022.

The Day Ahead

In the afternoon session, US economic indicators and the NASDAQ Index will likely provide direction. Core PCE Price Index, personal income, and spending will draw interest. An unexpected rise in the Core PCE Price Index would refuel Fed Fear going into the weekend.

Investors should also track FOMC member chatter. FOMC member Loretta Mester will speak today.

While the stats and the NASDAQ Composite Index will provide afternoon direction, regulatory activity, and lawmaker chatter will remain the focal points. An increase in regulatory activity would test buyer appetite amidst rising regulatory uncertainty.

The NASDAQ mini was down 32.75 points this morning.

Crypto Market Extends Losing Streak to Three Sessions

It was a mixed Thursday session. A bullish start to the day saw the crypto market cap rise to an early morning high of $1,075 billion before hitting reverse. The reversal saw the crypto market cap slide to a mid-day low of $1,036 billion.

However, finding afternoon support, the crypto market cap ended the day at $1,049 billion, marking a $5.67 billion loss on Thursday.

The Crypto Market Movers and Shakers from the Top Ten and Beyond

It is a mixed session for the crypto top ten.

ETH bucked the bearish trend, rising by 0.47%.

However, MATIC led the way down, falling by 2.84%.

ADA (-1.54%), BNB (-1.31%), BTC (-1.00%), DOGE (-1.29%), and XRP (-1.71%) also joined the broader crypto market in the red.

From the CoinMarketCap top 100, it was a mixed session.

Enjin coin (ENJ) and Stacks (STX) led the way, rising by 12.04% and 10.81%, respectively, with conflux (CFX) ending the day up by 7.36%.

However, tezos (XTZ) fell by 6.21%, with NEO (NEO) and monero (XMR) seeing losses of 5.55% and 3.77%, respectively.

24-Hour Liquidations Ease Back on Bearish Crypto Session

Over 24 hours, crypto liquidations returned to below-normal levels on Friday. Long positions had a higher share of liquidations, accounting for 60.41% of total crypto liquidations. This morning, 24-hour liquidations stood at $96.91 million, down from $125.29 million on Thursday morning (UTC).

Liquidated traders over the last 24 hours were also lower. This morning, liquidated traders stood at 29,024 versus 49,712 on Thursday morning. Crypto liquidations were lower over 12 and four hours and over one hour.

According to Coinglass, 12-hour liquidations stood at $46.66 million, down from $63.13 million on Thursday morning, with four-hour liquidations falling from $8.76 million to $3.50 million. One-hour liquidations declined from $5.31 million to $0.365 million.

The chart below shows market conditions throughout the session.