Why is the crypto market down this week?

The crypto market is down this week, with the total market capitalization falling by 4.4% to reach its lowest point since June 14 at $1.02 trillion. This movement has increased Bitcoin (

Regulatory uncertainty and lawsuits weigh on crypto

Financial difficulties within the Digital Currency Group (DCG), which operates GBTC, have also had a negative impact on investor sentiment. A subsidiary of DCG is grappling with a debt exceeding $1.2 billion to the Gemini exchange.

Additionally, Genesis Global Trading, which declared bankruptcy due to losses stemming from the collapse of Terra and FTX, is now suing DCG, which is run by Barry Silbert. This precarious situation could lead to forced selling of positions in the Grayscale Bitcoin Trust if DCG fails to meet its obligations.

Further compounding the market’s woes is pending regulation. The SEC has leveled a series of charges against Binance, the crypto market’s largest exchange, and its CEO, Changpeng Zhao, alleging misleading practices and the operation of an unregistered exchange.

The largest crypto by market cap aside from Bitcoin, Ether also lacks clarity around its legal status. While the Commodity Futures Trading Commission chair believes Ether is a commodity rather than a security, there is currently no clarification from the SEC.

While the crypto market continues to grapple with regulatory uncertainty, the Ripple chief technology officer believes the tide is turning on the U.S. regulatory environment.

Liquidations and low volume drive the crypto market lower

The start of September ignited a wave of Ethereum leveraged liquidations, with $37 million in liquidations occurring in the first week of this month.

The rush of Ether liquidations comes as the entire crypto market is shedding total value locked (TVL) and volumes continue to decrease. The crypto market TVL reached a 2023 high on April 15 at $53 billion, while the current value is at $37.7 billion, reflecting a loss of over $15 billion.

Some analysts believe the renewed strength of the U.S. dollar, which hit a six-month high on Sept. 7, will continue to be a danger to crypto assets.

Related: Bitcoin bids move to lowest since March as BTC price dips under $25.7K

As the cryptocurrency market navigates through these multifaceted challenges, the ebb and flow of various economic factors and regulatory developments will undoubtedly continue to shape its trajectory in the coming months.