Bitcoin, Ether slip as audit firm Mazars pauses work for crypto clients, S&P 500 futures drop

The crypto market traded weak on Friday after French audit firm Mazars, which recently did Binance's proof-of-reserves report, suspended work for crypto exchange clients and global markets traded risk-averse.

Bitcoin (BTC), the leading cryptocurrency by market value, fell 2% to $16,950, extending a retreat from the one-month high of $18,300 reached Wednesday. Ether (ETH), the second-largest cryptocurrency, fell 4.3% to $1,210, hitting the lowest since Nov. 29, CoinDesk data show.

Binance's BNB fell over 3% to $247, a level last seen on Sept. 26, and other major coins like XRP, LTC, and SOL registered similar losses.

Mazars discontinued their veritas.mazars.com website dedicated to crypto audits in a move that probably highlights the prevailing discomfort among traditional institutions to associate with crypto projects.

"Overnight crypto dump courtesy of Mazars and Binance worries," trader and analyst Alex Kruger, tweeted.

Early this month, Mazars published Binance's proof-of-reserves report, showing the giant exchange's bitcoin reserves were overcollateralized. The report, however, did not provide details about the internal controls in Binance's margin and loan products, raising doubts about the exchange's health.

Binance saw customer withdrawals worth several hundred million dollars as investors scrambled to take direct custody of their coins.

Several observers have dismissed the uncertainty surrounding Binance as coordinated FUD, a crypto slang for fear, uncertainty and doubt.

"Paid lobbyists and spokespersons are carrying SBF's voice and torch while he tries to change the narrative of the misappropriation of customer funds. As those attempts have been largely discredited, the attacks on Binance have intensified," Markus Thielen, head of research and strategy at Matrixport, wrote in a note to clients on Friday.

Risk-off

Investors in traditional markets sold risk, driving the U.S. stock futures lower and adding to the crypto market's woes as early this week, major central banks, including the Federal Reserve, pushed back against expectations for an early pivot to liquidity easing.

At press time, the futures tied to the S&P 500 traded 1% lower, signaling a possible extension of Thursday's 2.5% slide.

The Fed on Wednesday said that while rate hikes could slow, more liquidity tightening is needed to control inflation, forcing markets to reassess expectations for rate cuts in the second half of 2023.

The European Central Bank said it will raise interest rates ‘significantly’ in the months ahead to combat entrenched inflation.

"The ECB has been unusually clear in its pushback against market pricing. In the near term, markets will have to question the sustainability of the recent rally, analysts at ING said.

Ether's price chart (CoinDesk, Highcharts.com)