Bitcoin Slips, But Conditions For Cryptocurrency To Thrive Remain

Bitcoin (BTCUSD -0.07%) traded lower on Saturday, but the world's largest cryptocurrency remained on track for a healthy month despite a drop in global banking confidence.

Bitcoin has dropped 1.8% to $27,616 in the last 24 hours. It increased by about 20% in March and by more than 66% this year. According to Dow Jones Market Data, Bitcoin was on track for its biggest month since January, when it surged about 39%.

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On Saturday, the second-largest coin, EtherETHEUR +0.16%, fell 1.2% to $1,754. Cardano (ADAUSD -0.62%), a smaller cryptocurrency, lost 0.3%, while Dogecoin sank marginally.

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Cryptocurrencies have made significant gains this year as the banking industry has been under pressure. Yet, following another increase in interest rates by the Federal Reserve, digital assets have mostly returned to their connection with the stock market, swinging about with the Dow Jones Industrial Average (DJIA +0.41%) and S&P 500SPX +0.56%. Fears that cryptocurrency broker Coinbase (ticker: COIN) would be charged with securities fraud by US regulators have dragged on the mood.

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"The success of Coinbase is critical for long-term crypto development. In the United States, Coinbase is an important alternative for those getting started with cryptocurrency, said Edward Moya, senior market analyst at Oanda." ​

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Weekend crypto trading has been unstable, with crypto markets suffering from a shortage of liquidity. This has been worsened by the November collapse of exchange FTX and the subsequent failures of two crypto-focused institutions.

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According to analysts, liquidity has been increasing as the Fed's stance on monetary tightening has turned to a more dovish posture.

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"Bitcoin is the most effective liquidity sink in the world," the analysts said in a report Friday. "Therefore, we anticipate that if global private market liquidity increases, the circumstances for crypto to thrive will stay intact."

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