Crypto Currents: Markets face liquidity strain amid regulatory shifts

The market mood is risk-off as macroeconomic jitters and the nomination of a hawkish Fed chair drive capital toward traditional safe havens like gold. Bitcoin has sharply decoupled from the tech rally, leaving investors anxious as leverage washes out of the system. Stay up on the crypto news that matters with “Crypto Currents,” daily from The Fly. Join us at 2 PM ET for your essential briefing on the fast-moving world of cryptocurrency on FlyCast radio.

BITCOIN TESTS CRITICAL SUPPORT AS EXCHANGE VOLUMES PLUMMET: The digital asset market is grappling with a short-term bear cycle that has seen bitcoin (BTC-USD) slide to roughly $74,000, its lowest level since April 2025. According to Bloomberg, this “retail exodus” is severely impacting major exchanges like Coinbase Global (COIN), Gemini Space Station (GEMI), and Bullish (BLSH), with share prices dropping between 40% and 55% as trading volumes dry up. CoinShares reports that digital asset investment products saw $1.7B in weekly outflows, turning year-to-date flows negative.

CORPORATE TREASURIES AND EXCHANGES DEPLOY CAPITAL DURING MARKET DIP: While many investors flee, institutional conviction remains visible through aggressive buying. As detailed in a Monday morning filing, Strategy (MSTR) acquired 855 bitcoin for $75.3M prior to the latest crash, bringing its total holdings to 713,502 BTC. Simultaneously, Cointelegraph highlights that Binance has begun a $1B conversion of its Secure Asset Fund for Users into bitcoin, starting with an initial $100M purchase. Tron (TRX-USD) founder Justin Sun also informed CoinDesk of plans to purchase up to $100M in bitcoin for the network’s treasury. However, not all corporate treasuries are afloat; BitMine Immersion Technologies (BMNR) is facing $6.95B in unrealized losses on its ether (ETH-USD) holdings.

GLOBAL REGULATORS EMBRACE ARTIFICIAL INTELLIGENCE AND STABLECOIN FRAMEWORKS: Jurisdictions are tightening oversight while integrating new technology to stabilize markets. South Korea’s Financial Supervisory Service announced upgrades to its VISTA system, utilizing artificial intelligence to automatically detect price manipulation. Meanwhile, Reuters reports that Hong Kong will begin granting its first stablecoin issuer licenses in March, though the Hong Kong Monetary Authority expects to approve only a “very few” initially. In the U.K., the Bank of England is exploring ways to bypass traditional card payments by using stablecoins and tokenized deposits to lower merchant costs, per Bloomberg.

FEDERAL RESERVE NOMINATION VIEWED AS MIXED SIGNAL: Investor attention is also fixed on Washington following the nomination of Kevin Warsh to lead the Federal Reserve. According to Cointelegraph, economists at Kraken view the move as a “mixed signal” that may stabilize rather than expand market liquidity.

ANALYST COVERAGE: The current market drawdown is viewed by Bernstein analysts as a temporary phase of an “institutional cycle” destined to reverse in early 2026, providing a foundation for long-term growth. This optimism is bolstered by Clear Street reports indicating that CFTC Chairman Michael Selig is finally providing the leadership the industry has sought for years. Selig’s “Project Crypto” initiative and his directive to withdraw restrictive event contract proposals signal that the CFTC is prepared to resolve the regulatory uncertainty surrounding prediction markets, a move that directly benefits Coinbase Global and Circle (CRCL). As these regulatory hurdles clear, the focus shifts to the physical backbone of the industry, where analysts at H.C. Wainwright have initiated coverage on Hut 8 (HUT) with a Buy rating and an $80 price target. The firm emphasizes Hut’s “meteoric rise” as a weight-class infrastructure contender, particularly following its $7B deal with Anthropic and Fluidstack, a partnership backed by Alphabet (GOOGL) that significantly lowers debt costs and solidifies its role in the high-performance computing sector.

PRICE ACTION: As of time of writing, bitcoin was trading at $79,005.08 while ether was trading at $2,376.72, according to price data from TipRanks.