(Bloomberg) — Bitcoin’s new-year rebound has hit the buffers, hampered by a crypto crackdown in the US and fears that higher-for-longer interest rates will cause investor appetite for speculative assets to wither.
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The largest token’s 6% three-day retreat is the worst over such a time-span since December, while a gauge of the largest 100 digital assets is down 5%. Bitcoin hovered near $21,800 as of 1:15 p.m. Friday in Singapore.
Crypto exchange Kraken on Thursday said it will scrap staking products in the US and pay $30 million to settle Securities and Exchange Commission allegations that the products broke rules. The development served to highlight escalating regulatory skepticism about the digital-asset sector, which continues to squirm under the ramifications of the collapse of the FTX group.
“Regulators have been caught with their pants down on FTX and the community fears that the regulatory pendulum will swing the other way aggressively,” said Cici Lu, founder of Venn Link Partners, a blockchain adviser.
She added that there is also “wild speculation” going around that the crypto sector is going to find it harder to access banking services in the US.
Riskier investments like crypto are under pressure too because concerns about sticky inflation are hardening bets on a higher peak for interest rates.
Bitcoin’s next test may be whether it can hold above its 200-day moving average, near $20,000, said Tony Sycamore, market analyst at IG Australia Pty. The token’s year-to-date bounce from last year’s rout has ebbed to 32%.
The Kraken and SEC developments had consequences across crypto-linked assets. Shares in Kraken’s rival Coinbase Global Inc.’s sank over 14%, the most in more than six months, on concern the latter’s staking products are at risk.
Meanwhile, coins linked to decentralized staking services such as Lido and Rocket Pool — which may be harder for regulators to pin down — have received a tailwind over the past couple of days.
For crypto market prices: CRYP; for top crypto news: TOP CRYPTO.
–With assistance from Sunil Jagtiani and Akshay Chinchalkar.
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