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Bitcoin treads water under US$22,000 following SEC action on Kraken, Ether falls

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Bitcoin was little changed in Monday morning trading in Asia in a mixed morning for the top 10 non-stablecoin cryptocurrencies by market capitalization. Bitcoin traded under US$22,000 after the U.S.-based Kraken crypto exchange halted its staking service on Thursday and paid a fine of US$30 million to the Securities and Exchange Commission (SEC) for failing to register the service. The SEC move sent much of the crypto market lower over the weekend. XRP led the losers this morning, while Solana headed higher.

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Fast facts

  • Bitcoin dipped 0.4% in the past 24 hours to US$21,796 at 8 a.m. in Hong Kong, losing 5% over the past seven days to trade in the same price range of almost one month ago, according to data from CoinMarketCap. Ether dropped 1.6% to US$1,515, logging a 7.1% weekly loss.
  • Solana rebounded 3.1% to US$21.48, though remains 8.5% lower for the past seven days. The gain today follows a report by crypto research firm Delphi Digital that said Solana is the largest non-fungible token (NFT) blockchain after Ethereum, representing 14% of all NFT transactions.
  • XRP fell 2.3% to trade at US$0.37, a weekly loss of 6%. Ripple Labs Inc., a company whose payment network is powered by XRP, has been engaged in its own legal battle with the SEC since December 2020. The SEC alleges Ripple Labs issued an unregistered security in the form of XRP. The firm said it expects a ruling in the first half of this year, which would provide greater legal clarity to the crypto industry overall.
  • SEC Chair Gary Gensler warned other crypto exchanges to “take note” of the fine on Kraken over its staking service during a Friday appearance on CNBC’s Squawk Box. “Companies like Kraken can offer investment contracts and investment schemes, but they have to have full, fair and truthful disclosure … They were not complying with that basic law,” Gensler said.
  • However, he was criticized for the move on Kraken by SEC Commissioner Hester Peirce, who called it the act of a “lazy” regulator.
  • U.S. equities had a mixed day on Friday. The Dow Jones Industrial Average rose 0.5% and the S&P 500 Index gained 0.2%, while the Nasdaq Composite Index closed the day 0.6% lower.
  • Investors are positioning for Tuesday’s release of the January Consumer Price Index (CPI) in the U.S., a widely used measure of inflation in the economy that is also used by the Federal Reserve to set interest rates. 
  • Economists expect an 0.4% increase in the CPI for January for an annual slowdown to 6.2% from 6.5%. Core CPI is expected to grow 0.4% over the previous month, bringing the annual rate to 5.5%.
  • The CPI in December showed prices rose 6.5% year-on-year, falling from the 7.1% recorded in November, which in turn showed a steady decline from October’s 7.7% and 8.2% in September.
  • The Fed has raised interest rates multiple times since last March to tackle inflation, and analysts at the CME Group predict a more than 90% chance that the Fed will raise rates by a further 25 basis points at its meeting next month. U.S. interest rates are currently at 4.5% to 4.75%, the highest in 15 years, and Fed officials have repeatedly indicated they could raise rates to as high as 5%.

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