Bitcoin, Ether drop as bank stocks rise

The prices of major cryptocurrencies, including Bitcoin and Ether, declined on Thursday morning trading in Asia, following a week of gains. Solana, the popular blockchain platform for decentralized apps and crypto-related businesses, was hit the hardest, with an 8.71% drop to US$19.11. The market slump comes amid concerns about recent bank failures in the U.S. and the broader financial sector’s health after months of interest rate hikes in the U.S. and Europe. The U.S. Department of Justice is also seeking to block the US$1 billion sale of bankrupt crypto lender Voyager to Binance.

Regulatory challenges and uncertainty continue to plague crypto-related businesses. Anchorage Digital, a U.S.-based digital asset platform, announced that it would lay off 20% of its workforce amid regulatory uncertainty. Meanwhile, the Binance exchange said it would stop handling pound sterling transactions for U.K. customers, citing regulatory pressure. Additionally, Formfunction, an NFT marketplace on the Solana blockchain, announced that it would wind down operations by March 29.

The total crypto market capitalization fell 2.48% in the past 24 hours to US$1.06 trillion, while total trading volume over the last 24 hours dropped 18.36% to US$82.90 billion. The recent turmoil in the crypto market and financial sector has impacted U.S. equity markets, with the Dow Jones Industrial Average falling 0.87%, the S&P 500 dipping 0.70%, and the Nasdaq Composite Index edging up 0.05%.

Despite the volatility in U.S. markets, foreign investors remain undeterred, with net capital inflows in January climbing to a one-year high of US$183.1 billion as overseas investors bought up long-term securities. The market turbulence may lead the Federal Reserve to pause planned interest rate hikes in the coming months, especially in light of the bank failures in the U.S. and Europe. As of Thursday morning in Asia, U.S. stock futures rose, pointing to some return of confidence for trading later in the day.