Bitcoin’s Return to the January Days
Bitcoin returned to January levels on Thursday, plunging below $20,000.
The largest cryptocurrency by market capitalization recently traded at $20,067, down 7.7% in the past 24 hours, as nervous investors brooded over ongoing inflationary pressure, fallout from the implosion from Silvergate Bank, compatible with cryptocurrencies, and more recently, a lawsuit from the State of New York which alleges that ether and other cryptos are securities. BTC has now erased around half of its gains in the first six buoyant weeks of the year when hopeful investors sent the crypto up around 40% and past $25,000 in the middle of the year. -FEBRUARY.
“A lot of people are afraid the domino effect is just beginning,” said Eddy Gifford, wealth management adviser for investment adviser Tactive. “There’s FTX, now Silvergate, who’s next? We also had news from the Fed where (Fed Chairman Jerome) Powell was very hawkish about raising interest rates probably higher than anyone would even want to expect it – and potentially on sustaining those higher rates for longer.In these situations, risky assets generally tend to fall, as valuations are a function of the ability to meet estimates and the interest rate environment.
He added: “So if the interest rate environment stays high for longer, that’s going to push prices down.”
Ether roughly matched bitcoin’s plunge to change hands at around $1,430, its lowest level since mid-January. Other major cryptocurrencies were firmly in the red with CRO, exchange token Crypto.com down 7.6% and popular coins DOGE and SHIB down more than 8%. The CoinDesk Market Index, a measure of the performance of the broader crypto market, fell 7.5%.
The bad mood in the crypto markets has also manifested itself in the liquidations of some $307 million from crypto traders in the past 24 hours, according to data from Coinglass. Bitcoin (BTC) traders suffered the heaviest losses, some $112 million, while Ether (ETH) liquidations topped $73 million. Of the liquidated trading positions, some $282 million were long, betting on higher prices.
Meanwhile, stock markets stumbled amid a sell-off in bank stocks that sent JPMorgan Chase and Bank of America down more than 5% and 6%, respectively. The technology-focused Nasdaq fell 2.1%, while the S&P 500 and the Dow Jones Industrial Average (DJIA) fell 1.8% and 1.7%, respectively. The slowdown came even as jobless claims edged up, a mildly encouraging sign given the tight labor market that pressured prices higher.
Tactive’s Gifford said that if bitcoin breaks above $20,000, “we could hit $15,000 pretty quickly,” and if we break through $15,000, we’ll quickly rise to $10,000. But he noted bitcoin’s resistance and its halving next year. “It has generally been a spark for bitcoin bull markets,” he said.
He added: “We’ll see a few more companies fall, but that’s only going to strengthen those that remain in the background. And I think that justifies the fact that we’re starting to see more widespread adoption of digital assets in general. . »
Futures holders remain unsubdued
The average funding rate for bitcoin and ether perpetual futures remains positive, despite recent concerns about market turmoil. Funding rates are set by exchanges and regulate the price of futures contracts relative to the market value of the asset.
Positive funding rates indicate bullish sentiment as holders of long positions pay for short positions. It is the opposite when the financing rates are negative.
BTC funding rates have been positive since February 13, with the exception of a negative decline on March 5.
Silvergate Bank, which respects cryptocurrencies, will “voluntarily liquidate” its assets and cease operations, its holding company, Silvergate Capital Corp, announced on Wednesday. Jim Bianco, President and Macro Strategist of Bianco Research, LLC, and Octavio Marenzi, CEO and Founder of Opimas, LLC, commented on the latest developments. Additionally, Bennett Tomlin, co-host of Crypto Critics’ Corner, discussed the recent Wall Street Journal report that the company behind the world’s largest stablecoin accessed bank accounts through forged documents and of intermediaries.