On Friday, Bitcoin’s value fell below $20,000 for the first time since January, taking away over $70 billion worth of investment and reversing its brief 2023 rally.
After facing a prolonged crypto winter in the wake of FTX and Terra Luna’s collapse, Bitcoin began climbing out of its slump and rising above the $25,000 mark in February.
However, while crypto enthusiasts grew optimistic, the crypto giant faced a downturn as its market cap fell from $1.04 trillion on February 21 to $945 billion on March 9.
Some colloquial $BTC thoughts:
Market looks rough – range high rejection, big inefficiencies below us
19k-20k last & only technical structure as a do-or-die punt
Any acceptance below there would bring yearly open/range lows into play
Meme the monthly all you want, it’s A+ pic.twitter.com/Um17PX0MmE
— Cred (@CryptoCred) March 10, 2023
The plunge comes on the heels of a series of concerning news for the cryptocurrency market. Earlier in the week, the U.S. Federal Reserve announced that inflationary pressures had worsened over the year, likely leading to higher interest rates in the near future.
Last Wednesday, the market also saw the fall of another major institution, this time involving Silvergate Bank.
The crypto-friendly institution slowed operations and liquidated its assets after interrogation from third-party auditors. The bank cited “recent industry and regulatory developments” as primary reasons for its liquidation.
“Silvergate is one of several factors in bitcoin’s underside test. In addition to Silvergate, there is market concern of greater interest rate hikes and softening stock market prices,” Bitbull Capital CEO, Joe DiPasquale, said. “The also shows increasing scrutiny of crypto.”
“Taken together, the market has continued to tighten and retest support levels.”
Bitcoin’s plunge caused ripples across the entire cryptocurrency ecosystem, with cryptocurrencies and firms dependent on Bitcoin feeling the brunt of the waves.
Investors liquidated over $370 million worth of cryptocurrency just yesterday, with Bitcoin losing over $130 million and Ethereum over $93 million.
😓 With #Bitcoin hitting $20.6k & #altcoins plummeting even faster, crowds are focusing back on $BTC. This is the highest ratio of BTC vs alt discussions since July, 2022. High Bitcoin discourse is a fear sign, which historically can turn around markets. https://t.co/6QjTNeCFm7 pic.twitter.com/MAx3ZXhrtp
— Santiment (@santimentfeed) March 9, 2023
Alongside Bitcoin’s falling value, the second major cryptocurrency Ethereum has also faced increasing scrutiny from regulatory bodies. The New York Attorney General considered Ethereum a security token, after filing a lawsuit against KuCoin based on securities violations.
The lawsuit worsened cryptocurrency regulation fears, leading to further market-wide plunges.