Bitcoin BTC price plummets to mid-January levels
Bitcoin’s return to January days
Bitcoin returned to January levels on Thursday, plunging below $20,000.
The largest cryptocurrency by market cap recently traded at $20,067, down 7.7% in the past 24 hours as jittery investors braced for ongoing inflationary pressures, fallout from the implosion of crypto-friendly Silvergate Bank, and most recently, a lawsuit in New York state which claims that ether and other cryptos are securities. BTC has now erased roughly half of its gains from the first six weeks of the year, when hopeful investors sent the crypto up around 40% and passed $25,000 in mid-February.
“There are a lot of people who are afraid that the domino effect might just be starting,” Eddy Gifford, a wealth adviser for investment adviser Tactive. It’s FTX, now Silvergate, who’s next? We also had news from the Fed where (Fed Chair Jerome) Powell was very hawkish about raising interest rates probably higher than anyone wanted to even expect — and potentially keeping those rates higher for longer. In such situations, risk assets generally tend to decline, because valuations are a function of the ability to meet estimates and the interest rate environment.”
He added: “So if the interest rate environment remains high for an extended period of time, it will push prices down.”
Ether roughly matched bitcoin’s dive to change hands at around $1,430, its lowest level since mid-January. Other major cryptocurrencies were firmly in the red with CRO, token of exchange Crypto.com off 7.6% and popular meme coins DOGE and SHIB both down more than 8%. The CoinDesk Market Index, a measure of the broader crypto market’s performance, was down 7.5%.
The sour mood in crypto markets also manifested itself in crypto traders’ roughly $307 million in liquidations in the past 24 hours, according to Coinglass data. Bitcoin (BTC) traders suffered the most losses, around $112 million, while ether (ETH) liquidations passed $73 million. Of the liquidated trading positions, around 282 million dollars were longs, betting on higher prices.
Meanwhile, stock markets stumbled amid a massive selloff 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 Dow Jones Industrial Average. (DJIA) fell 1.8% and 1.7% respectively. The downturn came even as jobless claims rose slightly, an encouraging sign to say the least given the tight labor market that has pushed prices up.
Tactive’s Gifford said that if bitcoin breaks $20,000, “we could get to $15,000 pretty quickly,” and if we break through $15,000, we’ll go to $10,000 quickly. But he noted bitcoin’s persistence and halving next year. “It’s usually been a spark for bull markets in bitcoin,” he said.
He added: “We’ll see a few more companies fall, but that’s only going to make the ones that are left on the back end that much stronger. And I think that builds a case that we’re actually starting to see a more widespread use of digital assets in general.”
Futures contract holders remain unbowed
The average funding rate for perpetual futures contracts in both bitcoin and ether remains positive, despite recent concerns about market turmoil. The financing rates are set by exchanges and regulate the price of futures contracts in relation to the market value of the asset.
Positive funding rates indicate bullish sentiment, as holders of long positions pay off shorts. The opposite is the case when financing rates are negative.
Funding rates for BTC have been positive since February 13th, with the exception of a negative dip on March 5th.
Crypto-friendly Silvergate Bank will “voluntarily liquidate” its assets and cease operations, its holding company, Silvergate Capital Corp., said Wednesday. Bianco Research, LLC President and Macro Strategist Jim Bianco and Opimas, LLC CEO and Founder Octavio Marenzi weighed in on the latest developments. Additionally, Crypto Critics’ Corner co-host Bennett Tomlin discussed the recent Wall Street Journal report that the company behind the world’s largest stablecoin gained access to bank accounts using forged documents and intermediaries.
