Bitcoin prices fell Friday morning in Asia to below US$27,000 amid concerns over reduced liquidity and network congestion that are driving up transaction costs. Ether fell below support at US$1,800 as the top 10 non-stable cryptocurrencies retreated. Polygon’s Matic led the losers. U.S. stock futures edged higher as Thursday’s economic data indicated inflation was moderating, sparking optimism that the Federal Reserve could halt its interest rate hikes in June.
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Bitcoin and Ether fall to monthly lows
According to data from CoinMarketCap, bitcoin slid 2.13% to US$26,974 in the 24 hours as of 8:30 a.m. in Hong Kong, losing 6.63% for the week. The world’s largest cryptocurrency fell to US$26,781 at some point on Thursday, the lowest price since March 28.
Congestion on the Bitcoin blockchain is fueling the slide, with a backlog of pending transactions reaching nearly 300,000 Friday morning, more than six times higher than the number on May 9. This is when the BRC-20 token standard was introduced to allow fungible tokens to be minted on the Bitcoin network and generated an increase in activity, according to data from blockchain researcher Jochen Hoenicke .
The jump in transaction volumes has raised concerns among Bitcoin developers. Luke Dashjr, a Bitcoin Code contributor, emailed the Bitcoin developer community on Monday suggesting blocking transactions of BRC-20 tokens, which “threaten the smooth and normal use of the Bitcoin network as a currency. digital peer-to-peer”.
Bitcoin’s decline also comes amid growing liquidity concerns. Jane Street Group and Jump Crypto, two of the world’s leading market makers, have reportedly quit trading digital assets in the United States, according to a Bloomberg report on Wednesday.
Ether fell 2.34% to US$1,795, posting a weekly loss of 4.45%. The token fell to US$1,774 on Friday morning, the lowest price since April 3.
The Beacon chain of the Ethereum network briefly stopped validating transactions early Friday morning, with Ethereum developers Tweeter later that the outage had been resolved and the cause was still being investigated.
All other top 10 non-stable cryptocurrencies traded lower. Polygon’s Matic token led the losers, falling 3.75% to US$0.8406 and falling 14.45% for the week. The token recorded a low of $0.8332 earlier today, the lowest price since January 8, 2023.
The total crypto market cap fell 2.11% in the past 24 hours to US$1.12 trillion. Total trading volume fell 17.87% to $37.67 billion.
NFT Index Plunges, Ethereum Sales Fall After Milady Hype
Indices are indirect measures of the performance of the global NFT market. They are operated by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.
In the non-fungible token (NFT) market, the Forkast 500 NFT Index fell 1.42% to 3,394.50 in the 24 hours at 10:30 a.m. in Hong Kong, down 7.14% for the week.
NFT sales on the Ethereum blockchain have fallen 47.62% in the past 24 hours to $17.65 million as hype for the Millady Maker NFT collection has died down. Millady Maker sales fell 86.53% to $1.01 million, according to data from CryptoSlam.
According to Eric Dettman, NFT Advisor at CryptoSlam, NFT trading is slowing due to the recent memecoin hype, with very few new users entering the space. NFT buyers on the Ethereum blockchain totaled 45,298 over the past seven days, a decline of 72.97%.
Memecoins are also losing momentum. The price of Ordi, the memecoin that accounts for more than 60% of the total market capitalization of BRC-20 tokens, has fallen by 31.43% in the past 24 hours, according to blockchain data tracker BRC-20.io .
Stock futures gain on slowing inflation data
US equity futures rose at 11:00 a.m. in Hong Kong. Dow Jones Industrial Average futures edged up 0.07%. S&P 500 futures gained 0.14%. And Nasdaq Composite futures added 0.25%. All three U.S. indices closed mixed in regular trading Thursday on investor concerns about banking risks.
The U.S. producer price index (PPI) recorded an annual increase of 2.3% in April, below a forecast of 2.4% and the slowest pace since January 2021, according to Reuters on Thursday.
Initial jobless claims in the United States rose to 264,000 in the week ending May 6, beating expectations and reaching the highest level since October 2021, according to a Thursday Bloomberg report. Along with the PPI, the data points to a slowing US economy, which could prompt the Federal Reserve to leave interest rates unchanged in June.
On U.S. banks, shares of PacWest Bancorp fell more than 20% on Thursday, after the California-based lender said its deposits fell about 9.5% in the week ending May 5. , sparking fresh concerns about the banking sector after a series of failures among lenders this year.
President Joe Biden and key lawmakers postponed Friday’s talks on raising the U.S. debt ceiling to early next week, according to CNN on Thursday, with little progress in negotiations so far.
The Federal Reserve will make its next move on June 14 on interest rates, which are now between 5 and 5.25%, the highest since 2006. The CME FedWatch Tool predicts an 87.1% chance that the The Fed is keeping rates unchanged in June, and a 12.9% chance of another 25 basis point rate hike, up from 3.9% on Thursday.
(Updates with the equity section.)
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