Cryptos suffer from fears of market illiquidity

Several experts agree that fears of a lack of liquidity in the market have reached digital assets. Yesterday, on Thursday, PacWest, the last of the struggling US regional banks, announced an outflow of 9.5% of its deposits.

Vineeth Bhuvanagiri, managing director of Emurgo Fintech, the founding entity of the Cardano blockchain, believes that excessive liquidity concerns are causing "seemingly slight selloffs to have an outsize impact on price."

For his part, Edward Moya, senior analyst at Oanda, stresses that, unlike what happened during the collapse of Silicon Valley Bank, it does not seem likely that there will be "a strong demand for cryptos at this time". However, the expert believes that "banking contagion fears still remain low as some banks like Western Alliance show deposits are rising".

On the other hand, the lack of agreement on the U.S. debt ceiling is also causing concern in the cryptocurrency sphere. It should be noted that if Republicans and Democrats fail to agree on an extension or an increase in it, the U.S. could default on June 1.

"A US default would produce an economic and financial catastrophe," warned Janet Yellen, US Treasury Secretary, who warned Congress that the government will not be able to continue to meet all its obligations if the debt limit issue is not resolved. For his part, Jamie Dimon, CEO of JP Morgan, announced that the bank will convene a series of meetings, which he referred to as a "war room", to assess the implications of a possible default.

According to Bolsamania's technical analyst, Cesar Nuez, we must pay close attention to the loss of the $25,000 level for Bitcoin, as he does not rule out "an extension of the falls to the $22,000 level, levels where the 200-session average converges".

In the rest of the market, there have been significant falls. The main altcoins such as Ripple (XRP), Cardano (ADA), Polygon (MATIC) and Solana (SOL) dropped between 2% and 4% in the last day.