Bitcoin Price Falls. Liquidity Concerns Are Rising.

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A contracting money supply is generally a poor sign for risk assets such as Bitcoin and other cryptocurrencies.


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Bitcoin
and other cryptocurrencies were dropping Tuesday, with market attention on a potential decline in monetary liquidity.  

Bitcoin has fallen 0.6% over the last 24 hours to around $27,300. That consolidates a drop from heights of above $30,000 reached last week.  

“Risks of a liquidity pullback are rising as debt ceiling concerns rise, the European Central Bank ramps up quantitative tightening and China easing measures cool,” analysts at Saxo Bank said in a research note Tuesday. 

A contracting money supply is generally a poor sign for risk assets such as crypto. Attention likely also will remain on the tension between cryptocurrency platforms and U.S. regulators over the treatment of crypto tokens. 

Crypto trading platform
Coinbase
(ticker: COIN) said Monday it filed a petition to a U.S. appeals court in an effort to force the Securities and Exchange Commission to respond to a plea the company made last year for formal rules on digital assets.

“The action Coinbase filed today is a small but important part of our multi-year, continual plea to leaders in Washington for clear rules of the road,” Coinbase said in a blog post on its website. 

Beyond Bitcoin,
Ether
—the second-largest crypto—dropped more than 1% to around $1,820. Smaller cryptos or altcoins were weaker, with
Cardano
falling around 1% and
Polygon
down 3%.
Dogecoin
traded flat.

Write to Adam Clark at [email protected]

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