Cryptocurrencies took a tumble on Thursday and Friday following unsettling news involving Silvergate Capital, the bank backing many of crypto’s largest players, which is facing major client losses and bankruptcy.[0] Bitcoin fell 4% to $22,385, while Ethereum also dropped 3%, hitting a 16-day low.[1]
The Federal Reserve is expected to announce an increase in interest rates at its next meeting, which starts on March 22, 2023.[2] Analysts at the CME Group predict a 72.3% chance that the Fed will raise rates by another 25 basis points this month, and a 27.7% chance for a raise of 50 basis points.[3]
Coinbase (COIN 1.27%) and other major clients announced they would stop using Silvergate, and the bank’s stock plummeted by close to 58%.[4] Cryptocurrencies held up relatively well considering the news, but investors are now growing more worried.[5]
To make matters worse, the Department of Justice is reportedly looking into Silvergate for possibly violating anti-money laundering or Bank Secrecy Act (BSA) laws. Silvergate is important for the crypto ecosystem because it provided critical infrastructure with its real-time payments network for fiat dollars that could better facilitate crypto transactions.[3]
Bitcoin has recovered this year after tumbling more than 60% in 2022 to below $17,000, and is now up more than 30%.[6] However, it could be in for a month of sideways trading now that the broader rally in risk assets has faded.[6] For certain chart analysts, the token’s drop below its 50-day moving average increases the risk of further drops.[7] Ethereum has nudged levels close to $1,740 before declining in the current sell-off, with the $1,500 level being a crucial support in the short term.[8]
Bitcoin moved just 0.03% last month in United State dollar terms, making February 2023 likely its least volatile in history.[9] Data from Coinglass confirms that BTC/USD went practically nowhere for four weeks straight.[10] CryptoQuant analyst abramchart said that whale activity is rising on Bitcoin spot exchanges, with the Bitcoin Exchange Whale Ratio rising to 0.78 as of March 1st.[11]
The total crypto market capitalization dropped 1.02% in the past 24 hours to US$1.07 trillion, while the total trading volume over the last 24 hours went down 12.30% to US$42.65 billion.[12]
0. “Bitcoin Tumbles as Silvergate Fears Wipe Out Bullish Crypto Traders” Barron’s, 3 Mar. 2023, https://www.barrons.com/articles/bitcoin-ethereum-price-crypto-markets-today-e005b72c
1. “Latest Crypto Collapse: Bitcoin And Ethereum’s Losses Top $24 Billion As Silvergate Unravels” Forbes, 3 Mar. 2023, https://www.forbes.com/sites/dereksaul/2023/03/03/latest-crypto-collapse-bitcoin-and-ethereums-losses-top-24-billion-as-silvergate-unravels/
2. “Higher Than Expected PCE Numbers Push Bitcoin Down” BeInCrypto, 24 Feb. 2023, https://beincrypto.com/pce-numbers-push-bitcoin-down/
3. “Bitcoin slides below US$23,000 in broad crypto price slump” Forkast News, 3 Mar. 2023, https://forkast.news/headlines/bitcoin-below-23k-ether-slides-price-slump/
4. “Why Shiba Inu, Solana, and Cardano Are Falling Today” The Motley Fool, 2 Mar. 2023, https://www.fool.com/investing/2023/03/02/why-shiba-inu-solana-and-cardano-are-falling-today/
5. “Why Bitcoin, Ethereum, and Shiba Inu Are Falling Today” The Motley Fool, 3 Mar. 2023, https://www.fool.com/investing/2023/03/03/why-bitcoin-ethereum-and-shiba-inu-are-falling-tod/
6. “Bitcoin, ether slide on Friday as investors weigh potential fallout from Silvergate woes” CNBC, 3 Mar. 2023, https://www.cnbc.com/2023/03/03/bitcoin-ether-slide-on-friday-as-investors-weigh-potential-fallout-from-silvergate-woes.html
7. “Bitcoin sinks to two-week low as Silvergate fallout hurts crypto” The Australian Financial Review, 3 Mar. 2023, https://www.afr.com/markets/debt-markets/bitcoin-sinks-to-two-week-low-as-silvergate-fallout-hurts-crypto-20230303-p5cp9n
8. “Bitcoin, Ethereum: Crucial Support, Resistance Levels – Silvergate Capital (NYSE:SI)” Benzinga, 1 Mar. 2023, https://www.benzinga.com/markets/cryptocurrency/23/03/31189450/bitcoin-ethereum-heres-a-look-at-crucial-support-resistance-levels-as-selloff-intensifies
9. “Bitcoin’s least volatile month ever? BTC price ends February up 0.03%” Cointelegraph, 1 Mar. 2023, https://cointelegraph.com/news/bitcoin-s-least-volatile-month-ever-btc-price-ends-february-up-0-03
10. “Bitcoin Saw Low Volatility During the Month of February” ETF Trends, 3 Mar. 2023, https://www.etftrends.com/crypto-channel/bitcoin-saw-low-volatility-during-the-month-of-february
11. “Two Considerations as Bitcoin Withdraws Toward $23K” CryptoPotato, 2 Mar. 2023, https://cryptopotato.com/two-considerations-as-bitcoin-withdraws-toward-23k
12. “Bitcoin, Ether fall along with most top 10 cryptos amid potential for larger interest rate hikes” Yahoo Life, 2 Mar. 2023, https://www.yahoo.com/lifestyle/bitcoin-ether-fall-along-most-093353901.html