Bitcoin falls as cryptos get squeezed from all sides. Key levels are at risk.

“We expect downside follow-through because the near-term momentum has turned negative, maintaining our bearish bias in the short term,” said Katie Stockton, managing partner at technical research firm Fairlead Strategies. “Support is initially near the lower end of the daily cloud around $20,300, followed by the 200-day moving average around $19,700 … We remain long-term bearish.”

Crypto prices tend to move on factors both internal and external to the digital asset space, such as regulatory developments or macro forces respectively. Often these factors come one at a time. That is not the case now.

The latest decline came as sentiment took a hit in the past week amid concerns over the functioning of the crypto market and the prospect of a regulatory crackdown following revelations of a financial crisis at Silvergate Capital (ticker: SI).

A federally insured US bank focused on crypto companies, and a crucial intermediary in institutional crypto markets, Silvergate faced a bank run after the collapse of FTX last year that has caused a liquidity crisis that threatens its future. The bank’s crisis risks both affecting liquidity in wider markets and triggering a new regulatory intervention.

These endogenous factors weighing on cryptos are one thing – but exogenous macro pressures rearing their heads are another.

Bitcoin risked falling through the $22,000 level late Tuesday into Wednesday after a slide in the stock market, where

Dow Jones Industrial Average

and

S&P 500

just had their worst day in two weeks. Cryptos and stocks have been correlated amid a macro backdrop of high inflation and rising interest rates, with investor fears rising on Tuesday following comments from Federal Reserve Chairman Jerome Powell, which suggested interest rates could remain higher for longer.

“Risky assets fell sharply amid a hawkish speech from Fed chief Jerome Powell, after which markets began to price in the chances of a 50 basis point rate hike later this month,” said Alex Kuptsikevich, an analyst at brokerage FxPro. “Consolidation below $21,500 would be a strong bearish signal. However, more buying is likely at the end of the medium-term correction in such situations, and the bulls will only celebrate victory when the price returns above $22,500.”

Beyond Bitcoin,

Ether

— the second largest crypto commodity — was 1% lower at $1,550. Smaller cryptos or altcoins were firmly in the red, with

Cardano

down 1.5% and

Polygon

plunges 3%. Memecoins showed more of the same, with both

Dogecoin

and

Shiba Inu

reduction 1.5%.

Write to Jack Denton at [email protected]