The crypto market experienced a decline due to several factors. The demise of Silvergate Bank, a U.S. regulator-led lawsuit against KuCoin, and hawkish comments from the Federal Reserve Chair Jerome Powell all contributed to investor sentiment.
Bitcoin and Ether both hit monthly lows, with concerns that a revisit of bear market lows could occur. Additionally, interest rate hikes and expectations of a softening economy weighed on risk assets.
Major U.S. indices remained lower after Powell’s speech, and most major banks predict a sharp recession in 2023. The recent crackdown on centralized staking and uncertainty in the regulatory environment have prevented sustainable bullish momentum across the market.
The debate over which U.S. agency is at fault for Silvergate’s downfall has complicated liquidity flow across the entire industry, and banks are preparing for further crypto regulation by implementing anti-money laundering measures. The decline in crypto prices follows a strong start to 2023, with BTC price reaching $25,300 on Feb. 21. To improve sentiment across the sector, potential crypto traders might consider waiting for signs that U.S. inflation has peaked, or for the Fed to signal smaller interest rate hikes.