Bitcoin and Ether, the world's two biggest cryptocurrencies, dropped to their lowest levels since August as investors worried that a Democrat-controlled US Congress could bring stricter rules for the crypto industry.
Investors are concerned that Democrats could increase government oversight of cryptocurrencies following their victory in last week's US midterm elections. Several Democratic lawmakers have criticised the crypto industry and called for stronger rules.
Bitcoin and Ether prices hit lowest levels since August
Bitcoin, the world's largest cryptocurrency by market value, dropped around 2% to $73,708, according to Reuters. The price marked its lowest level since August.
Ether, the world's second-largest cryptocurrency, fell around 5% to $2,223, touching its lowest level since August, Reuters reported.
Bitcoin extended its losses on Monday after falling around 2% over the previous week. According to Investing.com, initial optimism following the Democrats' election victory was replaced by concerns about what their victory could mean for crypto regulations.
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US crypto regulations raise investor fears
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US crypto regulations raise investor fears
{{/usCountry}}Several Democratic lawmakers have expressed concerns about the cryptocurrency industry. They have called for tighter anti-money laundering rules and stronger risk management requirements for companies operating in the sector, according to Investing.com.
US Senator Elizabeth Warren, one of the strongest critics of the cryptocurrency industry among Senate Democrats, is expected to lead the powerful Senate Banking Committee. The committee has significant influence over financial industry regulations.
If Warren takes charge of the Senate Banking Committee, the cryptocurrency industry could face greater scrutiny. Her leadership could increase pressure on crypto companies to follow stricter financial rules, Investing.com reported.
Investors are uncertain about the future of cryptocurrency-friendly legislation in the US. Several crypto-related laws passed over the past two years had received major support from Republicans. Democrats gaining control of Congress has raised doubts about whether similar legislation will move forward.
Bitcoin ETFs see $1.28 billion outflows
Spot Bitcoin exchange-traded funds (ETFs) faced major withdrawals last week as institutional investors reduced their exposure to the cryptocurrency amid concerns about stricter regulations, according to Investing.com.
Spot Bitcoin ETFs recorded withdrawals worth $1.28 billion last week. This was their second consecutive week of outflows and their worst weekly performance since late June, data from SoSoValue showed.
The heavy withdrawals suggest that large investors and financial institutions are becoming more cautious about Bitcoin. The selling also indicates that concerns about the future of crypto regulations are affecting institutional demand.
XRP, Solana, Dogecoin extend crypto market losses
Apart from the US election results, cryptocurrency prices have also been affected by a $6 billion heist at Binance, the world's largest cryptocurrency exchange. The incident has added to concerns among investors, Reuters reported.
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Cryptocurrency prices largely missed the rebound seen in other financial markets, particularly technology stocks. Heavy withdrawals from Bitcoin ETFs and regulatory concerns continued to weigh on the sector, Investing.com reported.
The decline was not limited to Bitcoin and Ether. Several other major digital currencies also fell on Monday as selling pressure spread across the wider cryptocurrency market. XRP dropped 6.4% and was close to falling below the $1 mark, according to Investing.com. Solana and Cardano each fell around 3% as investors continued to sell cryptocurrencies.
BNB, another major cryptocurrency, dropped 2.4% during the trading session. Dogecoin fell 3.3%, while the $TRUMP cryptocurrency also declined 3.3%. However, $TRUMP remained above the record lows it had touched last week, according to Investing.com.