Posted: March 10, 2023 1:34 PM ET
Bitcoin saw its losses deepen on Friday, falling below $20,000 for the first time since January, as investors fret over contagion from Silicon Valley Bank, which was shuttered by regulators and taken over by the Federal Deposit Insurance Corp. days after crypto-friendly Silvergate Bank said it would cease operations.
The biggest cryptocurrency BTCUSD fell 7.5% on Friday to hit $17,580 on Friday, according to data from CoinDesk. EtherETHUSD fell 8% to around $1,401.
Major…
Bitcoin saw its losses deepen on Friday, falling below $20,000 for the first time since January, as investors fret over contagion from Silicon Valley Bank, which was shuttered by regulators and taken over by the Federal Deposit Insurance Corp. days after crypto-friendly Silvergate Bank said it would cease operations.
The biggest cryptocurrency
BTCUSD
fell 7.5% on Friday to hit $17,580 on Friday, according to data from CoinDesk. Ether
ETHUSD
fell 8% to around $1,401.
Major U.S. stock indexes also fell on Friday. The Dow Jones Industrial Average
DJIA
slipped 0.4%, the S&P 500
SPX
lost 0.6% and the Nasdaq Composite
COMP
fell 0.8%, according to FactSet data.
As the 16th largest bank in the United States at the end of last year, Silicon Valley Bank is a major lender to venture-backed companies. Its collapse on Friday weighed on the wider sector – the KBW banking index fell more than 7% on Thursday for its biggest daily loss since 2020.
“There is little reason to buy bitcoin now, as the market is saturated with negative developments, not only specifically for the crypto industry, but also for the broader financial market,” wrote Yuya Hasegawa, crypto market analyst at Bitbank, in a Friday Note.
Meanwhile, crypto traders are also increasingly concerned about regulatory uncertainty in the United States. Some fear that the liquidation of Silvergate will accelerate regulators’ efforts to tighten control over banks’ relationships with crypto companies, some industry participants have said.
Read: Bitcoin plummets, as Silvergate Bank collapse highlights biggest threat to US crypto industry
Additionally, New York State Attorney General Letitia James on Thursday filed a lawsuit against crypto exchange KuCoin for failing to register as a securities and commodities broker. James also claimed ether is a security in the lawsuit, the first time a regulator has done so in court.
Positions in leveraged derivatives are also fueling bitcoin’s decline, according to Vetle Lunde, principal analyst at K33 Research. Crypto traders saw the largest bitcoin long position liquidation volume since the collapse of FTX on Thursday, Lunde noted.
The crypto market is also “very illiquid” at the moment, Lunde said. Lenders like Alameda and Genesis collapsed, and many other market makers have since become more conservative. “With Silvergate closed, fiat rails are less reliable and market makers are even more conservative. The SVB situation today has probably made the situation even worse,” Lunde said.
From a technical standpoint, if bitcoin closes below its $20,300 support level on Friday, it could increase the risk of the crypto falling to a November 2022 low of $15,600, according to Katie Stockton. , Founder and Managing Partner at Fairlead Strategies.