Bitcoin falls from $21k, ending 14-day win streak

Bitcoin falls from $21k on DoJ announcement, hawkish comment, and Genesis bankruptcy possibility.
Bitcoin falls from $21k, ending 14-day win streak

January 19, 2023 - Bitcoin failed to break a 10-year-old daily winning streak record, losing the US$ 21k price level after negative news regarding a DoJ announcement of an international cryptocurrency enforcement action, hawkish comment from a Fed member, and Genesis potential filing for bankruptcy this week.

The US Department of Justice (DoJ) announced yesterday an enforcement action against an obscure crypto exchange called Bitzlato, arresting its CEO and founder Anatoly Legkodymov in Miami for moving more than US$700mn in illicit funds. The crypto market reacted negatively to the announcement, but there was a relief when DoJ disclosed the target of the operation, which was unknown for the majority of the market participants.

On top of that, St. Louis Fed President James Bullard said the Fed should not “stall” on raising interest rates until they are above 5% (currently at 4.25-4.5% p.y.). We think this kind of comment puts at risk the chances of a rate hiking deceleration in the next FOMC meeting on Feb 1st, in which the market is expecting a reduction of the pace of hikes from 50 bps to 25 bps.

And last but not least, Bloomberg reported that Genesis, the lending and trading business owned by the DCG group, has plans to file for bankruptcy by the end of this week, if it fails to raise capital. For now, it is an ongoing situation, in which the company is discussing alternative measures with creditors. In our view, DCG/Genesis situation is one of the main downside risks for the crypto market in the short term, with the potential to erase the gains from the recent rally. However, there are some indications that DCG could raise capital through the sale of part of its business, with some players in the market already showing interest in these assets.

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Bitcoin loses US$21k level ending a 14-day winning streak arrests the CEO of an obscure crypto exchange comment from a Fed member impacts Bitcoin prices (DCG group) could file for bankruptcy by the end of this week

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