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Five Things to Know in Crypto Today: US and EU Regulations Diverge
Friday was a hectic day. With US government investigation, Fed Fear, and economic concerns all playing a role, the market cap of cryptocurrencies fell for a third day in a row.
In the second part of the week, investor mood soured. Beginning on Wednesday, the cryptocurrency market declined for three straight days as buyer interest was dampened by Fed chatter and economic data from the US and Europe.
The cryptocurrency market drops for a third time as recession fears take hold.
The overall value of the cryptocurrency market plummeted to $1,117 billion on Friday, down $39.92 billion. Significantly, the market value decreased for a third straight day, dropping $127 billion for the week.
Investor mood was negatively impacted by US economic data and Fed talk, with the most recent statistics pointing to the start of a US economic recession.
The manufacturing PMI rose from 49.2 to 50.4, while the services PMI improved from 52.6 to 53.7 in April.
The encouraging statistics on Friday came after Wednesday's UK and euro area inflation data, Thursday's Philly Fed Manufacturing Index results, and Friday's dismal jobless claims data for investors.
With the statistics from Thursday dealing a $16.04 billion blow, the UK and euro area inflation numbers caused a $69.4 billion outflow.
With the Fed hawks out in full force, the debate about the need for more rises to contain inflation failed to abate.
On how much further the Fed has to go, the verdict is still out. Although the Fed staff expects a mild recession later this year, more rate rises might cause the US to enter one. However, if inflation stays high, the US economy might see a rough landing.
The risk of a 25-basis point interest rate rise in May has increased from 49.4% to 89.1%, according to the CME FedWatchTool. Significantly, the likelihood of another shift in June has also increased, rising from 16.6% to 23.4% from one week ago.
Increased Fed hawkishness would be bad for the cryptocurrency market.
US Retains Crypto Opposition Under Treasury Secretary Yellen Taking Up the Chorus
On Friday, US Treasury Secretary Janet Yellen highlighted cryptocurrencies. Yellen's statements from the Financial Stability Oversight Council Meeting, which highlighted US government initiatives to promote financial stability, were made public by the US Department of the Treasury.
The government "proposed interpretive guidance on nonbank financial company designations" as one of two recommendations.
Yellen used recent changes in the banking industry to emphasize the need of the suggested adjustments. The necessity for preemptive measures to address systemic risks brought on by nonbank financial entities whose operations or distress might endanger the financial system was emphasized by Yellen.
Significant interaction and communication with the firms under consideration would be part of the designation mechanisms. Significantly, during any designation review, the Council will also communicate with the company's principal regulator.
The Council would communicate with the SEC and CFTC on companies that deal with cryptocurrencies.
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