Bitcoin and other cryptocurrencies were falling Friday as traders continued to exercise caution as they monitored the U.S. debt-ceiling negotiations and the potential implications for stablecoins and the wider crypto sector.
Bitcoin
has declined 1.6% to $26,929 over the last 24 hours. The largest cryptocurrency has traded roughly in a band between $26,500 and $27,500 over the last week.
Analysts at J.P. Morgan cited concerns over a potential U.S. debt default as a reason for market caution, due to the potential fallout for Treasury securities. Such securities are held by many issuers of stablecoins, a type of cryptocurrency most often fixed to the U.S. dollar, as safe assets for their reserves.
“Any challenges faced by stablecoins in this adverse scenario could reverberate to the whole crypto ecosystem given the vital role stablecoins play in the crypto ecosystem in facilitating access to trading and decentralized finance and as source of collateral,” the J.P. Morgan analysts wrote in a research note.
Beyond
Bitcoin,
Ether
—the second-largest crypto—was down 1.1% to $1,809. Smaller cryptos or altcoins were also dropping, with
Cardano
down 1.8% and
Polygon
falling 0.6%.
Dogecoin
fell 0.6%.
Write to Adam Clark at adam.clark@barrons.com
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