Although United States inflation ran slightly cooler than expected in April, the crypto market traded with losses on Friday. Bitcoin (BTC) fell for a second day, dropping to the lowest level in more than six weeks while Ethereum (ETH) along with other major altcoins also declined.
Barring XRP, the cryptocurrency market was trading lower on Friday after the consumer price inflation (CPI) in April rose at a slower-than-expected pace. The CPI rose by a below-forecast 4.9% from a year earlier, the first sub-5% reading in two years, signaling the Federal Reserve will pause its rate hikes in June.
Despite the positive news, the digital assets industry reeled with losses as it seems that for the moment as investors are likely to monitor the market before jumping in again. Shivam Thakral, CEO at BuyUcoin explained,
“The crypto market remained almost flat as encouraging CPI data showed that inflation is cooling down and we can expect relaxation of monetary policies in the future. Historically, crypto volatility increases around the inflation data release and we can see some fluctuations later in the next week.”
Digital Tokens Witness Significant Fall
According to CoinMarketCap, the global crypto market cap slipped 2.72% in the last 24 hours to $1.10 trillion. The total crypto market volume over the last 24 hours decreased nearly 15% to $39.55 billion. Meanwhile, Bitcoin (BTC) dropped below $27,000 after a brief bull run zooming past the psychological $30K level.
At the time of writing, BTC is down more than 4% in the last 24 hours to trade at $26,265. On the other hand, the flagship token has declined over 10% in the past seven days despite the CPI reading cooled considerably since peaking out at around 9% in June 2022.
At the same time, Ethereum (ETH) tanked 4.37% over the past 24 hours to hover around $1,751. The second-largest digital token fell more than 7% in the last week after April’s inflation numbers came in lower than expected, causing a precipitous sell-off from investors.
In addition, on May 11, the Ethereum (ETH) blockchain failed to finalize transactions for slightly less than half an hour. Though the cause is still unknown, Ethereum contributor Superphiz noted the issue may have resulted from a lack of diversity of clients. He said that loss of finality could have been avoided if no client had more than one-third dominance over the network.
The beacon chain stopped finalizing about thirty minutes ago. I don't know why yet, but in general the chain is designed to be resilient against this, transactions will continue as usual and finalization will kick in when the problem is resolved. pic.twitter.com/utAS0uAWpG
— superphiz.eth 🦇🔊🛡️ (@superphiz) May 11, 2023
In tandem with the heavyweights of crypto, other major altcoins also traded with substantial cuts in the last 24 hours. Solana (SOL), Polkadot (DOT), and Polygon (MATIC) prices dropped in the range between 3% and 5%. Cardano (ADA) fell 1.44% in the last 24 hours to trade lower at $0.35. Avalanche (AVAX) and LiteCoin (LTC) spilled downwards 3.56% and 2.14% over the past 24 hours, respectively.
Regulatory Crackdowns Cripple Crypto
It seems a drop in liquidity, congestion on the Bitcoin blockchain and a US regulatory crackdown have sapped sentiment in the crypto sector. The crackdown on crypto has been a major cause for the falling prices as US regulatory agencies like the Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) continue to target digital asset firms.
Recently, Bitcoin mining firm Marathon Digital Holdings received a subpoena from the SEC related to alleged violations of securities laws. However, in the face of such adversity, the United States Chamber of Commerce, which happens to be the largest business organization in the world has fervently criticized the SEC for its “haphazard, enforcement-based approach” to regulating the cryptocurrency industry.
On May 9, in an amicus brief filed to the U.S. Court of Appeals, the U.S. Chamber of Commerce threw its unwavering support to Coinbase, accusing the SEC of deliberately creating a precarious and uncertain landscape for crypto companies operating in the country.
Furthermore, Paradigm, a crypto investment firm led by Coinbase co-founder Fred Ehrsam also petitioned to file another amicus brief, claiming that the SEC’s actions have “crippled a nascent industry.”