• Bitcoin and Ether fell on Monday due to investors fretting over inflation data, stablecoin regulation and the Kraken exchange incident.
• The New York Department of Financial Services issued an order for Paxos to stop minting new Binance USD tokens (BUSD).
• Investors will be eyeing Tuesday’s consumer price index (CPI) to see if the U.S. Federal Reserve’s monetary policy has continued to chip away at inflation.
Cryptocurrency Markets Drop
Cryptocurrency markets experienced a downturn on Monday as Bitcoin dropped 1.4% to trade around $21,640, while Ether fell below $1,500. This decrease was caused by investors worrying over upcoming inflation data, stablecoin regulation and the recent Kraken exchange incident.
Regulatory Activity in the Stablecoin Sector
The New York Department of Financial Services ordered Paxos to stop minting new Binance USD tokens (BUSD), claiming that the token was not being managed in a safe manner. As a result of this order, BUSD dropped to 0.9950 cents against its rival tether (USDT) on the Binance exchange, according to crypto data firm Kaiko.
Consumer Price Index (CPI)
Investors are looking forward to Tuesday’s consumer price index (CPI) report which will indicate whether or not the U.S Federal Reserve’s monetary policy has been successful in reducing inflationary pressure and predicting potential interest rate hikes in the future. In December 2020, CPI dipped 6.5%, signaling downward momentum that has positively impacted riskier asset markets; however Fed governors remain concerned about over-tightening money supply and causing economic recession..
Kraken Incident
Bitcoin had previously traded above $24000 as recently as February 1st 2021 but since then BTC’s value has decreased significantly after crypto exchange giant Kraken agreed to shut down its staking service within US borders and pay a fine of $30 million for settlement with the US Securities & Exchange Commission (SEC).
Conclusion
To conclude, cryptocurrency markets have seen significant drops due regulatory activity in terms of stablecoin regulations as well as inflation expectations from tomorrow’s CPI reports along with an incident involving crypto exchange giant Kraken which is expected to have long-term consequences for BTC prices going forward