Bitcoin saw its losses deepen on Friday, falling below $20,000 for the first time since January, as investors worried about contagion from Silicon Valley Bank, which was shut down by regulators and taken over by the Federal Deposit Insurance Corp., days after crypto-friendly Silvergate Bank said it would wind down operations.
Major cryptocurrency BTCUSD fell 7.5% on Friday to as low as $17,580 on Friday, according to CoinDesk data. 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 worried about contagion from Silicon Valley Bank, which was shut down by regulators and taken over by the Federal Deposit Insurance Corp., days after crypto-friendly Silvergate Bank said it would wind down operations.
The largest cryptocurrency
BTCUSD
fell 7.5% on Friday to as low as $17,580 on Friday, according to CoinDesk data. Ether
ETHUSD
fell 8% to around $1,401.
Major US stock indexes also retreated on Friday. Dow Jones Industrial Average
DJIA
fell 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 US at the end of last year, Silicon Valley Bank is a major lender to venture-backed companies. The collapse on Friday weighed on the entire industry – the KBW Bank 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 as well,” Yuya Hasegawa, crypto market analyst at Bitbank, wrote in a Friday note.
Meanwhile, crypto traders are also increasingly concerned about regulatory uncertainty in the US. Some worry that Silvergate’s liquidation will accelerate regulators’ efforts to tighten controls over banks’ dealings with crypto companies, some industry participants said.
Read: Bitcoin falls, as Silvergate Bank collapse highlights biggest threat to US crypto industry
In addition, New York 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 that ether is a security in the lawsuit, the first time a regulator has done so in court.
Leveraged derivatives positions are also fueling bitcoin’s decline, according to Vetle Lunde, senior analyst at K33 Research. Crypto traders on Thursday saw the largest liquidation volume of long positions in bitcoin since FTX’s collapse, Lunde noted.
The crypto market is also “very illiquid” at the moment, Lunde said. Lenders such as Alameda and Genesis collapsed, and many other market players have since been more conservative. “When Silvergate is closed, fiat rails are less reliable and market makers are even more conservative. The SVB situation today has probably worsened the situation further,” said Lunde.
From a technical perspective, if bitcoin closes Friday below the $20,300 support level, it could increase the downside risk of the crypto falling toward a low of $15,600 it reached in November 2022, according to Katie Stockton, founder and managing partner of Fairlead Strategies.
