Major US trading companies such as Jane Street Group and Jump Trading are reducing their participation in domestic crypto markets due to increasing regulatory uncertainties and associated risks. This withdrawal is causing a significant hole in the once-vibrant US crypto landscape, which could deter interest from institutional investors.
according to recent report of ARK Investment Management, a highly respected global asset manager and proponent of bitcoin, these developments are causing the liquidity of cryptocurrencies in the US to decline substantially and leading to increased volatility in cryptocurrency prices. Data from CoinMetrics suggests that Bitcoin’s daily transaction volume has fallen sharply, from $20 billion a day in March to nearly $4 billion last week.
This withdrawal is further evidenced by the gap in bitcoin price on Binance.US, which last week was roughly $600 higher than other exchanges, indicating weakened price discovery in the US market.
ARK Investment, which published a February report predicting that Bitcoin could reach $1 million by 2030, has long recognized the potential of digital assets and has previously invested in cryptocurrency-related stocks such as coin base and GBTC. However, the firm has not maintained a consistent holding pattern, having sold some of its holdings at times.
The current atmosphere of regulatory uncertainty is a cause for concern not only for existing players, but also for potential new entrants to the crypto space. The United States, once considered a hub of innovation for the crypto industry, now risks losing its footing to countries like the United Arab Emirates, South Korea, Australia, and Switzerland, which are seen as providing more favorable and secure regulatory climates. .
These evolving dynamics underscore the need for a clearer regulatory framework in the US for digital assets. As ARK Investment and others have warned, if these concerns are not addressed, the United States could be left behind in the race to harness the transformative potential of this burgeoning industry.