Bitcoin falls to lowest level since March as thin liquidity, regulatory pressure hits crypto markets

Bitcoin traded astatine its lowest level since mid-March connected Friday arsenic volatility, driven by debased liquidity, continued to deed cryptocurrency markets.

Bitcoin was trading astatine $26,312.23 astatine astir 5:09 a.m. ET, aft dipping beneath the $27,000 people connected Thursday, according to CoinDesk data. That's its lowest level since Mar. 17.

Ether, the second-largest integer currency by marketplace capitalization, besides fell connected Friday.

There are a fig of issues facing crypto markets close present including debased liquidity, a crackdown connected the manufacture from regulators successful the U.S. and macroeconomic worries.

Bitcoin is up astir 59% this twelvemonth but prices person remained volatile, with debased liquidity exacerbating moves higher and lower.

Clara Medalie, manager of probe at Kaiko, said determination has been a "notable driblet successful marketplace depth" for bitcoin.

Market extent refers to a market's quality to sorb comparatively ample bargain and merchantability orders. When marketplace extent is low, past comparatively tiny orders tin origin the terms of an plus to determination up oregon down successful a important way.

And the liquidity concern could beryllium acceptable to get worse aft Bloomberg reported that Jane Street and Jump Crypto, 2 of the biggest crypto marketplace makers, volition instrumentality a measurement backmost from crypto trading successful the U.S. arsenic the country's regulators proceed their crackdown connected the nascent industry. 

"While it is yet unclear the catalyst for today's crisp drop, the volatility is to beryllium expected fixed the existent authorities of liquidity, particularly aft larger marketplace shaper Jane Street and Jump Crypto revealed they were winding down their crypto exposure," Medalie said.

Liquidity has been a large contented for crypto markets since the closure of Silvergate and Signature Bank — 2 cardinal platforms that radical utilized to bargain into the crypto market.

Scrutiny from U.S. regulators connected the integer currency manufacture has ramped up since the illness of crypto speech FTX past year.

The U.S. Securities and Exchange Commission warned American crypto speech Coinbase successful March implicit potential securities instrumentality violations. Coinbase CEO Brian Armstrong said the institution is preparing for a years-long tribunal battle with the SEC.

Meanwhile, the Commodity Futures and Trading Commission alleged successful March that crypto speech Binance violated trading rules.

The crypto manufacture is successful a conflict with U.S. regulators, accusing the SEC and the U.S. authorities of not laying retired wide rules.

Meanwhile, the bitcoin web itself has faced congestion successful caller days with Binance past week forced to temporarily halt bitcoin withdrawals. Bitcoin transaction fees spiked this week and portion they are coming down, they inactive stay astatine elevated levels. The archetypal bitcoin web was not designed to grip high-volume transactions.

"Bitcoin's attempts to interruption done $30,000 person travel undone amidst a triple whammy of congestion issues connected the blockchain, liquidity constraints caused by the scaling backmost of apical market-makers Jane Street and Jump Crypto, and ever-circling regulators," Antoni Trenchev, co-founder astatine Nexo, told CNBC via email connected Friday.

- CNBC's Tanaya Macheel contributed to this report.