Bitcoin falls below $27,000 as cryptocurrency market makers pull back from trading in the US

Cryptocurrency prices fell on Thursday as investors studied a news report about two of the largest institutional liquidity providers calling their cryptocurrency trading business in the United States.

Bitcoin fell nearly 3% to $26,937.29, according to Coin Metrics, while ether lost 3.1% to trade at $1,793.82. They are on track to end the week down more than 8% and 9%, respectively.

earlier this week, Bloomberg reported Jane Street and Jump Crypto, two of the largest cryptocurrency market makers, will back down from cryptocurrency trading in the US as regulators in the country continue their crackdown on the nascent industry. CNBC’s Crypto World has reached out to the companies. Jane Street declined to comment and Jump did not respond.

“Overall, we will see greater price volatility in both directions as many of the large market makers have significantly reduced supply,” said David Wells, CEO of Enclave Markets.

“The larger market makers create more price stability because of the liquidity they provide,” he added. “You’ll see more frequent gaps up and down because the order of the books is generally thinner.”

In late February, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency Joint statement Warn banks of the liquidity risks associated with banking cryptocurrency firms.

A new lack of liquidity in the market has become a bigger topic after the closure of Silvergate and Signature Bank, which operated the two main onramps in the cryptocurrency market.

Bitcoin reached $30,000 a month ago for the first time since June and has been struggling to climb higher for much longer since then. It has been moving between that threshold and the upper part of the $26,000 level since then. But investors were not fazed by the downward moves.

Chart analysts were watching $25,200 as a key minimum before worrying about a more significant decline.