Prices of Bitcoin (BTC) and other cryptocurrencies fell on Friday as a result of losses in wider markets and tensions within the digital asset industry.
The largest cryptocurrency has fallen to its lowest levels since mid-January when it was close to $19,500 in a recent trough, and Bitcoin’s price has fallen 6% in the last 24 hours to $20,200. It appears that Bitcoin’s big rally to the beginning of 2023—which saw it rise above $25,000 from $16,500 in weeks—is in jeopardy.
Analyst Yuya Hasegawa of broker Oanda stated, “There has been nothing but negative headlines for Bitcoin and crypto this week.” There is no compelling reason to purchase Bitcoin right now because the market is overflowing with negative developments, not only for the cryptocurrency industry but also for the financial market as a whole.
Losses in the entire stock market, which continue to be largely correlated with Bitcoin, have been the most recent catalyst driving cryptos lower. After significant losses at SVB Financial Group (ticker:), the Dow Jones Industrial Average DJIA –1.07% and the S&P 500 SPX –1.45% plunged on Thursday and experienced further declines on Friday. A wave of selling in bank stocks caused by SIVB, the owner of Silicon Valley Bank, shook public sentiment.
A U.S. jobs report that did little to answer the question of whether the Federal Reserve will raise interest rates by half a point or a quarter of a point later this month—a bigger increase would be a bigger problem—hasn’t done much to help matters.
The deterioration of Bitcoin’s recent support at key price levels will be of particular interest to cryptocurrency traders. That increases the risk of a reversal of gains made since the beginning of the year and even a return to multi-year lows in late 2022.
“A close below that level today would confirm Bitcoin’s pending breakdown below cloud-based support around $20,300. According to Katie Stockton, managing partner of the technical research firm Fairlead Strategies, “a breakdown would be a bearish intermediate-term development, increasing downside risk to a low around $15,600 in November 2022.”
There are reasons to believe that volatility could increase over the weekend.
Since the Crypto Exchange, FTX went under in November, digital asset markets’ liquidity has been at an all-time low, with lower trading volumes escalating Bitcoin’s already volatile price. Due to the fact that Silvergate Bank ended its SEN interbank transfer service on March 3, a crucial piece of market infrastructure, there is a possibility that this will rise. This past weekend saw the lowest volume of bitcoin transactions in months.
Craig Erlam, an analyst at Oanda and a broker, stated, “A challenging weekend lies ahead.”
Beyond Bitcoin, the second-largest cryptocurrency, Ether ETH, lost 7% to $1,430. Cardano lost 1% and Polygon lost 2%, two smaller cryptocurrencies or altcoins, respectively. Dogecoin lost 9% and Shiba Inu lost 6%, respectively, making meme coins even more in the red.
