Crypto Exchange Kraken Settles With SEC, BTC Price Drops Below $22K


Cryptocurrency Exchange Kraken recently Agreed to settle with the U.S. Securities Exchange Commission (SEC), and with that news, Bitcoin’s price dropped below $22,000 on Thursday. This market decline of nearly 4% in the last 24 hours was a result of the agreement to close its U.S. cryptocurrency staking operations.

Kraken agreed to pay $30 million to the SEC to resolve the charges that it offered unregistered securities. The company also agreed to “immediately” end its crypto-staking-as-a-service platform for U.S customers. Ether (ETH), the second-largest cryptocurrency, followed BTC’s trend, recently trading down 4.3% to $1,569.

Stocks that were closely related to cryptocurrencies also declined. Coinbase dropped 14% of the population during Thursday’s midday trading hours, bitcoin miner Marathon Digital Holdings (MARA) dropped 13%, and MicroStrategy (MSTR), a major Bitcoin acquirer, dropped 10%.

Coinbase CEO Brian Armstrong Tweeted about the news, saying he had heard “rumors” that the SEC wanted to get rid of crypto staking in the U.S. for retail customers. This tweet prompted a slow late Wednesday-early Thursday BTC decline from just under $23,000 to $22,500.

GlobalBlock’s market analyst Marcus Sotiriou believes that this move could put the U.S. behind the rest of the world in the important crypto and blockchain technology revolution. Some analysts fear that BTC could retreat to $20,000 support as investors worry about the persistently strong jobs data and an extended U.S. Monetary Policy that will hinder economic growth. Others, however, see the current lull as a brief period before the next price surge.

The price of Bitcoin has recently taken a dive, slipping below $22,000 after Kraken announced it was closing its crypto staking operations in the U.S. This comes after the cryptocurrency experienced a severe price collapse.

Vineeth Bhuvanagiri, Managing Director of Emurgo, wrote in a note to CoinDesk that the markets had entered a “not only a recovery but an accumulation phase”. He added that this particular market behaviour is more similar to the sideways movements experienced during 2019 rather than the bull run that happened in 2020.

Mauricio Di Bartolomeo, co-founder of the crypto lending platform Ledn, also spoke to CoinDesk about the situation. While short liquidations usually fuel price increases, he noted that there have been no recent BTC short liquidations, meaning that the market might be more inclined towards sideways trading.

Data from the crypto data platform Coinglass shows that investors had redeemed around $90 million in BTC long positions over the last seven days, as compared with only $42 million in BTC short positions. Bartolomeo said that this indicates there is “modest leverage being taken both to the downside and the upside”, and that it’s the leveraged moves that usually cause violent price changes.

BTC plummeted about 60% in 2022 but managed to regain its lost ground in January. According to Messari’s latest quarterly report on bitcoin, recent market indicators such as the transfer of large amounts of BTC from centralized exchanges to self-custodial wallets and the growth of daily active addresses and transactions suggest “a potential market bottom” and “a persistence of long-term investor confidence”.

The report’s authors, Sami Kassab and Chris Collar, also noted that “although the hype surrounding bitcoin has diminished, the network has historically experienced a resurgence in popularity after periods of doubt”.

UPDATE (Feb. 9, 2023 22:30 UTC): Adds official SEC announcement from Kraken.

CORRECTION (Feb. 10, 2023 14:23 UTC): Kraken is only closing its U.S. staking operation.

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