Bitcoin feels the pressure from new banking chaos in the United States, with BTC price action falling below $20,000 for the first time in two months.
Bitcoin (BTC) fell to its lowest since mid-January on March 10, data from Cointelegraph Markets Pro and TradingView shows.
Silicon Valley Bank gets its ‘Silvergate moment’
Down 2.4% on the day, BTC/USD saw the majority of its losses during the previous day’s Wall Street trading as risk assets everywhere suffered setbacks.
These came courtesy of market cold feet on the back of major restructuring at Silicon Valley Bank (SVB)— the United States’ 16th largest commercial lender.
SVB parent company, SVB Financial, said that it was selling its entire securities portfolio at a major loss as part of a plan to raise over $2.2 billion in capital.
The result was a collapse in SVB Financial’s share price, which shed 60% during the session in a move all too familiar for crypto market participants who remember the recent demise of Silvergate bank.
Instead of the FTX debacle, however, SVB pinned the blame for its troubles on the Federal Reserve and its policy of quantitative tightening (QT) — a process of removing liquidity from the economy which has pressured risk assets across the board.
“We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients as they invest in their businesses,” CEO and president Greg Becker wrote in a letter to investors.
Second bank in a week potentially collapsing.
First, Silvergate looking to liquidate.
Now, Silicon Valley Bank dropping 61%.
The economy is not looking great, yet, Powell wants to continue and accelerate the hikes.
— Michaël van de Poppe (@CryptoMichNL) March 9, 2023
JAYPOW might have broken US banking system.
2008 it was a banks portfolios of bad credit – aka subprime.
2023 it was banks portfolios of long duration bonds like UST and MBS???
If it goes down then remember Mar ‘20, big down, bailout, then big up! My body is ready. pic.twitter.com/8MztWYAAlQ
— Arthur Hayes (@CryptoHayes) March 10, 2023
With stocks reeling from the news, however, it was only a matter of time before crypto caught the contagion.
While the S&P 500 finished the session down 1.8%, on track for its worst week of 2023, Bitcoin continued to fall overnight and ultimately gave up $20,000 support.
In so doing, it fell to its lowest levels since Jan. 13, erasing two months of gains.
BTC price already lacked support
Reactions to crypto losses varied — as Cointelegraph reported, many already expected a retest of substantially lower levels untouched since the start of the year.
“Will probably wick into 18-19k before this is over- but it’s just a retest,” popular trader Credible Crypto wrote in part of a Twitter response.
An accompanying chart sought to explain the rationale behind the scope of the down-move, calling it “logical and healthy, not unexpected or unforeseen.”
After February produced just 0.03% gains overall for BTC/USD, March proved to be a month of comedowns within days, emboldening conservative market participants to predict new local lows next.
Fellow trading account Daan Crypto Trades nonetheless said that the retreat had occurred “way quicker” than expected.
“If I were to simply go by the chart and forget about all the FUD, Macro and what not, I would personally be bidding here,” he told Twitter followers on the day.
“I do think that knife catching is dangerous and it’s good to see some ranging first.”
A chart showed areas of interest based on Fibonacci retracement levels from the local highs above $25,000.
Also following the unwinding of Fibonacci levels was trading resource Stockmoney Lizards, which had eyes on the 4-hour chart overnight.
dropping towards 50.0 Fib, 4h RSI oversold. Current bearish momentum just accelerated. pic.twitter.com/Ddotb6PCkr
— Stockmoney Lizards (@StockmoneyL) March 9, 2023
At the time of writing, BTC/USD circled $19,800, still threatening to continue dropping into the day’s Wall Street open.
Liquidations at post-FTX record as crypto “front runs” chaos
In a further episode of deja vu for crypto, the fresh bearish streak sent liquidations soaring across leveraged markets.
Related: Bitcoin keeps liquidating longs as BTC price action gives up $22K support
According to the latest data from monitoring resource Coinglass, those who were long BTC lost more money on March 9 than at any time since the immediate aftermath of the FTX implosion.
BTC long liquidations totaled $94.1 million, while the day’s total crypto tally came in at $248.8 million.
For trading resource Skew, the threat of worse to come remained, with crypto markets potentially dodging a bullet ahead of time.
“This looks like exit & unwinding flow to me. (front running bad news),” it wrote in part of Twitter comments on the day.
$BTC Coinbase Spot
This looks like exit & unwinding flow to me. (front running bad news)I definitely should have checked this before smh pic.twitter.com/gOAAqZHw1n
— Skew Δ (@52kskew) March 10, 2023
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