A string broke the steady upward trend of Bitcoin recently. BTC, the biggest cryptocurrency by market capitalization, has been more and more affected over the last week. The king coin experienced a heavy blow and fell below $20,000 after seeing a significant increase in 2023. It is noted that since mid-January, the asset has not dropped to this level.
The fall of Silicon Valley Bank is the second-largest banking failure in American history, behind Washington Mutual. It has caused falls in all financial markets as a number of risks, including persistent inflation and rising interest rates, continue to drive investors to the safety of cash. The S&P, Dow, and Nasdaq all ended the trading day in the red, down 1.45%, 1.07%, and 1.76%, respectively.
According to TradingView data, Bitcoin (BTC) bears got a head start on Friday’s events, breaching the psychologically significant $20,000 level in early trading hours and pushing the top cryptocurrency to a daily low of $19,628 before bulls were able to push the price back above $20,000 in the afternoon.
Bitcoin Market Chart Analysis
According to the market charts, Bitcoin has been trading in negative territory for the past 24 hours. Also, the coin’s 24-hour high, which was set in the first part of the period under consideration, was slightly over $21,790.
Similar continual price drops are depicted in the past 7-day charts after analysis. BTC’s price was $22,370 seven days ago.
According to the data, BTC rose to a 7-day high of $22,600 on March 5 but thereafter kept trading in the negative territory. BTC continued to fall between March 7 and 10, with more and more drops in the coin’s average price being noted.
The biggest price drops for BTC were recorded on March 9 and 10, when the currency fell from $21.7k to $19.9k in less than a day.
Bitcoin Worth $119M was Liquidated in 24 Hours
Traders saw $307 million in liquidations as the bitcoin market took a significant fall. While $119 million in bitcoin was liquidated over the course of the last day, traders who traded bitcoin suffered the most losses.
Bitcoin plunges below $20k: Possible Reasons?
According to analytics, the current price declines are just a response to the recent criticism surrounding cryptocurrency, which began with the collapse of a bank Silvergate that supported cryptocurrency. Additionally, there is still some inflationary pressure.
Also, the general attitude of important figures in the regulatory sector may be fueling panic in the cryptocurrency market.
In addition to Silvergate, the market is concerned about the [Federal Open Market Committee] raising interest rates more frequently and lowering stock market prices. The [Securities and Exchange Commission] is also monitoring cryptocurrency more closely. As viewed together, the market has carried on tightening and retesting support levels.
Meanwhile, Silicon Valley Bank was shuttered on Friday morning, and its accounts were taken over by the Federal Deposit Insurance Corporation, making it the worst U.S. bank collapse since the global financial crisis. SVB Financial, the bank’s parent firm, disclosed late on Wednesday that it had liquidated $21 billion worth of assets for a $1.8 billion loss. SVB was a significant bank for technological start-ups.
After undergoing inflation, Bitcoin is now immune to all macro phenomena. Unless microeconomic conditions change and the NASDAQ collapses, experts predict that the Bitcoin price correction will be brief.
After hitting the support, the U.S. Dollar Index (DXY) began to rise. The price of Bitcoin is under pressure due to the current FUD in the cryptocurrency market and a surge in DXY above 103.50.
Bitcoin has never dropped below the top price of a prior bull run in a down market. The difference this time is that Bitcoin needs to travel a much less distance to reach that milestone.
If Bitcoin drops below the $20,000 threshold, according to Marcus Sotiriou, an analyst at the UK-based cryptocurrency firm Global Block, there may be an additional loss. Sotiriou brought up the debate surrounding Celsius, the potential insolvency of the business, and the apparent liquidity crisis that compelled Celsius to halt all user withdrawals earlier this week.
Voluntary liquidations happen when investors are compelled to abruptly and unwillingly close positions on Bitcoin derivatives (such as futures and options) after their accounts run out of collateral to support those bets. This coerced selling places more downward pressure on the price of bitcoin, which can further push the price down and lead to more liquidations.