Causes Of Bitcoin Prices Falling That Make Crypto Market Bearish Again

The SEC's action against staking caused the price of Bitcoin to fall again. (Photo; Doc. Unsplash)

JAKARTA – The crypto market plunged again after the SEC accused crypto exchange Kraken of offering an unregistered crypto staking program, deeming it a violation of US securities laws. This shock caused panic in the cryptocurrency market as a whole.

This condition causes market players and crypto enthusiasts to be unsure whether staking will be completely banned by US regulators or not. The SEC's crackdown sent shockwaves through the crypto market. The price of Bitcoin is down about 4 percent in the last hour, causing it to drop back down to the $21 thousand level.

After the exchange will deactivate the staking feature, about 30 billion US dollars of funds leave the cryptocurrency market. Triggering a general drop in crypto prices.

In New York, after trading above US$23,000 at the start of the week, Bitcoin fell to nearly US$21,500 by 3:30 p.m. Ethereum, the main altcoin, was also down more than 5 percent, while other tokens such as Avalanche and Dogecoin saw drops of more than 8 percent.

"Today's action should make it clear to the market that staking-as-a-service providers must register and provide full, fair, and honest disclosure and investor protection," said SEC Chairman Gary Gensler, quoted by Coingape.

Blockchains like Ethereum are now leveraging the proof-of-stake (PoS) method to verify transactions through the placement of cryptocurrency. Kraken and Staked's quarterly report shows that the value of the currency staked will be USD 42 billion by the end of 2022.

The report also states that around 23 percent of cryptocurrency market capitalization is dominated by blockchains that use staking features. In September 2022, Ethereum switched to a proof-of-ownership system, and Kraken is ranked 4th as one of the largest Ether staking stores in the world.

Meanwhile, US stocks also took a hit on Thursday, with the S&P 500 entering its third straight week of losses. The S&P500 index closed down 0.85 percent, the Nasdaq fell 1.05 percent, and the Dow Jones Industrial Average lost 0.70 percent.

Industry experts predict that cryptocurrency prices will continue to fall in the near future, with DeFi-only tokens expected to receive the most pressure, as crypto staking is a very important product for the wider DeFi ecosystem.