Cryptocurrencies under pressure amid decline in investor sentiment and UK crackdown

·3-min read
A PayDepot Bitcoin ATM machine is pictured in a shop in Union City, New Jersey, U.S., May 19, 2021. REUTERS/Mike Segar
The UK's ad watchdog plans to crack down on misleading or irresponsible crypto ads. Photo: Reuters

Cryptocurrencies were lower on Friday morning amid a broader decline in investor sentiment and further crackdown in the UK.

While bitcoin (BTC-USD) was down 1% to trade at $32,845, ethereum (ETH-USD) plunged almost 5% to trade at $2,115. And joke token dogecoin (DOGE-USD) fell 3.5% to trade at $0.21.

Naeem Aslam, chief market analyst at Ava Trade, said investors are reducing their exposure to risky assets as uncertainty about the future outlook grows.

“The notorious assets are famous for being extremely volatile, and stock traders are currently shifting their focus to safer assets such as treasuries.”

But he added that “institutional investors are still showing an increased interest in digital currencies and will most likely take advantage of this opportunity to acquire digital assets at a discount.”

Bitcoin was down on Friday morning. Chart: Yahoo Finance UK
Bitcoin was down on Friday morning. Chart: Yahoo Finance UK

Bank of America is the latest financial powerhouse to enter this domain, with plans to begin cryptocurrency research coverage. It follows Goldman Sachs' announcement in May that it would open a cryptocurrency trading desk and offer bitcoin derivatives.

In the UK, top bank Santander (SAN) told customers it will stop payments from accounts to Binance “wherever possible.” Binance is one of the world’s largest Bitcoin exchanges from operating in the country.

This comes after Barclays (BARC.L) made a similar move and follows from the UK's Financial Conduct Authority's orders to Binance to remove all advertising and financial promotions.

In one of the most significant moves by a regulator to date, the FCA said that the firm must not carry out any regulated activities in Britain without prior consent.

And the UK's Advertising Standards Office has said it will begin a major effort this month to remove misleading or irresponsible crypto ads, especially online.

Read more: From Binance to Coinbase: The rise of cryptocurrency exchanges

Meanwhile digital currency company Circle has said it will go public via a special purpose acquisition company (SPAC) in a deal that values the company at $4.5bn.

It said "a central component of our mission has been helping to establish and grow USD Coin, the fastest growing dollar digital currency in the world."

"Circle is the latest company from the crypto industry to turn to the public markets in the wake of bitcoin’s growth last year and earlier this year," said The Wall Street Journal.

"In 2021 alone, bitcoin doubled in price to nearly $64,000, attracting a swath of new investors and capital into the crypto markets," the report added.

Cryptocurrency exchanges have been in the headlines in 2021 thanks to the IPO of Coinbase (COIN) in New York and, more recently, regulatory scrutiny of Binance, one of the biggest and fastest-growing private exchanges.

Exchanges form a key part of the cryptocurrency landscape, much like they do in the stock market. The cryptocurrency market is generally accessed through online exchanges where traders can buy or sell using deposits of fiat currency from debit or credit cards.

Watch: What is bitcoin?