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crypto Prices fell on Thursday as investors weighed in on a news report about two of the largest institutional liquidity providers winding down their U.S. crypto trading businesses.
Bitcoin fell nearly 3% to $26,937.29, according to Coin Metrics, while ether it lost 3.1% to trade at $1,793.82. They are on track to end the week down more than 8% and 9%, respectively.
Earlier this week, Bloomberg reported that Jane Street and Jump Crypto, two of the biggest crypto market makers, will take a step back from crypto trading in the US as the country's regulators continue to crack down on the nascent industry. CNBC's "Crypto World" reached out to the companies. Jane Street declined to comment and Jump did not respond.
"Overall, we're going to see much bigger price swings both ways as many large market makers have cut supply significantly," said David Wells, chief executive officer of Enclave Markets.
"Larger market makers create more price stability because of the liquidity they provide," he added. "You will see more frequent gaps up and down as the order books are thinner overall."
Bitcoin (BTC) this week
In late February, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a joint declaration warning banks of liquidity risks associated with crypto banking companies.
The new illiquidity in the market became a bigger issue following the closure of Silvergate and Signature Bank, which operated the two main fiat gateways to the cryptocurrency market.
Bitcoin reached the $30,000 level one month ago for the first time since June and has struggled to break higher for longer since. It has been hovering between that threshold and the top of the $26,000 level ever since. However, investors have not been fazed by the bearish moves.
Chart analysts have been eyeing $25,200 as a key threshold before worrying about a more significant decline.
