This Week in Coins: Bitcoin, Ethereum Dip as Crypto Market Sheds $58B

Crypto appears to be shedding much of its new year gains, with Bitcoin and Ethereum each posting hefty losses on the week.

By Tim Hakki

Bitcoin and Ethereum. Image: Shutterstock

This week in coins. Illustration by Mitchell Preffer for Decrypt.

It was a week of all-around losses, with holders of the two biggest cryptocurrencies by market capitalization also hit by the bearish price action.

Market leader Bitcoin (BTC) only depreciated by 6% over the last seven days and currently changes hands at $23,136, according to CoinGecko.

Ethereum posted a slightly lighter loss of 7% over the same period to land on $1,604 at the start of the weekend.

Beyond the market leaders, it was much of the same story across the board.

Polygon (MATIC) posted one of the biggest dips, shedding 16.7% this week to trade at $1.27 at the time of writing. MATIC began its downward slide on Tuesday when news broke that Polygon Labs was laying off 100 employees (20% of its workforce) after restructuring.

The following day, Polygon users fell prey to false rumors that the blockchain had been down for two hours.

Polygon later revealed that a few nodes on the network temporarily went out of sync, causing the outage of an independent chain explorer called Polygonscan. Since Polygonscan hadn’t updated with new Polygon blocks or transactions for a couple of hours, people mistakenly thought Polygon itself had stopped.

Litecoin (LTC), Polkadot (DOT), and Cardano (ADA) also posted significant losses on the week, ranging from 8% to 9%.

Solana (SOL) had spent most of last November and all of December in freefall because of its association with executives from the collapsed FTX exchange. Since New Year, it’s managed to stymie the losses, with the asset falling just 1% this week. It traded at $22.4 at the time of writing.

The main reasons SOL managed to hold the fort this week were news of the upcoming migration of the Helium network to Solana and a marked increase in Solana NFT trading volumes.

Similarly, the Uniswap (UNI) token held off the bears, dropping just 1.4% over the week and currently selling for $6.61.

The token’s resilience may be due to the fact that, as of Wednesday, users of Uniswap’s NFT market can now transact with UNI and any other Ethereum-based token.

New rules proposed in Hong Kong, Canada, U.S.

Since the downfall of several high-profile crypto companies last year including Terra, Celsius, Three Arrows Capital, and FTX, crypto regulation has become a recurring talking point for regulators across the world.

Regulators in Hong Kong, Canada, and in the United States were central to this week’s high-level crypto chat.

On Monday, Hong Kong’s Securities and Futures Commission (SFC) published a consultation paper proposing "to allow all types of investors, including retail investors, to access trading services provided by licensed VA [virtual asset] trading platform operators."

The proposal recommends conditions be met before retail investors can trade crypto—including knowledge and risk assessments, and potential caps to how much exposure traders can get. The Commission also recommends that only "large-cap virtual assets" be eligible for regulated trade.

Hong Kong’s Finance Secretary Paul Chan on Wednesday called Web3 a “golden opportunity” for the special administrative region and promised to “establish and lead a task force on VA [virtual assets] development, with members from relevant policy bureaux, financial regulators, and market participants, to provide recommendations on the sustainable and responsible development of the sector.”

That same day stateside, Republican House Majority Whip Tom Emmer (R-MN) introduced a bill proposing to bar the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals, a move which he argues would erode Americans' rights to financial privacy.

The CBDC Anti-Surveillance State Act would also require the American central bank to report to Congress about its experiments with digital currencies.

The following day, the Federal Reserve issued a new statement reminding banks of the risks of exposure to crypto. The Fed was joined in this warning by government agencies, including the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).

Across the border in Canada that day, the Canadian Securities Administrators (CSA)—comprising securities regulators from each of the 10 provinces and 3 territories in Canada—published a list of new requirements for crypto companies wishing to stay compliant.

Crypto traders in Canada are now prohibited from allowing customers to buy or deposit "Value Referenced Crypto Assets" (VRCAs), aka stablecoins, without the CSA’s prior written consent, which in this case means issuers need to ensure that the stablecoin is fiat-backed.