The cryptocurrency market took a hit as the value of Bitcoin (BTC) and Ethereum (ETH) fell by 5%. As the two largest cryptocurrencies by market cap, this downward trend has left many wondering just how low BTC and ETH can go.
Bitcoin (BTC) prices have seen a significant drop, falling more than 5% from $23,500 to $22,240 in the past hours. Similarly, Ethereum, the second most valuable cryptocurrency, also fell by more than 5%. This drop resulted in the loss of approximately $22 billion from the total market value of Bitcoin, which currently stands at $430.9 billion.
The reason for the sharp drop in the value of BTC may be the ongoing fall of Silvergate Bank, as it has increased the uncertainty surrounding the growth of fiat transactions. In addition, US authorities are looking to cut more financial ties between cryptocurrency firms and FDIC-insured institutions, which is also seen as a significant factor in the fall in bitcoin’s value.
BTC price losses were also underpinned by rising concerns about rising interest rates. Global cryptocurrency markets fell amid a string of positive U.S. economic data that signaled the Federal Reserve may need to raise interest rates higher and for a longer period of time.
As a result, cryptocurrency markets are flashing red, contributing to the decline in BTC prices.
Silvergate uncertainty undermines BTC
As mentioned earlier, the price of BTC has dropped significantly by 5% in the last hours, which has reduced its market cap by $22 billion. Concerns surrounding crypto-friendly bank Silvergate Capital contributed to the price of Bitcoin falling from $23,500 to $22,240.
Markus Thielen, head of research at digital asset exchange Matrixport, suggests that the recent decline in BTC prices is likely related to the controversy surrounding Silvergate Bank’s delayed filing of its 10-K financial report, as well as increased efforts by US regulators to limit the relationship between banks and cryptocurrency companies.
Also of note, Silvergate Capital ( SI ) announced Wednesday night that its annual report will be delayed due to losses from the FTX collapse in November and regulatory scrutiny on various fronts.
As a result, the uncertain situation at Silvergate Bank forced the main partners to cut ties, and the bank itself expressed concern about its ability to continue operations. In addition to this, cryptocurrency markets have fallen to mid-February lows, which are currently support levels.
However, markets are still trading within a range that has consolidated more than $1 trillion over the past six weeks.
Fed rate hike and cryptocurrency bearishness
The cryptocurrency market is expected to close this week on a negative note due to recently released solid US economic data fueling speculation that the Federal Reserve may raise interest rates aggressively to combat persistent inflation.
In terms of statistics, US jobless claims fell to 190,000 in the week ended February 24, below market expectations of 195,000 and 192,000 reported last week.
Although unit labor costs rose from 1.6% to 3.6% to 1.1% in the previous quarter, non-farm productivity fell to 1.7% in the fourth quarter (Q4) from 3.0 % in the previous quarter and 2.6% according to market expectations. As a result, the higher probability of interest rate hikes tends to lower the value of the cryptocurrency, and is believed to be another factor that has played a significant role in BTC price declines.
The US dollar lost some ground
The U.S. dollar initially rose on Thursday after upbeat data on jobless claims and other indicators of rising labor costs fueled speculation that the Federal Reserve may need to raise interest rates to fight inflation.
The gains were short-lived, however, and the dollar retreated from a 2-1/2-month high against the yen on Friday, posting its first weekly loss against a major currency since January.
As a result, some experts believe that a weak US dollar could help prevent cryptocurrency prices from plummeting.
Bitcoin price
The current price of Bitcoin is $22,396 and the 24-hour trading volume is $26 billion. The technical forecast for the BTC/USD pair indicates a violation of the symmetrical triangle pattern at $23,250 with a breakout that puts the price of BTC at the $22,046 support zone.
On the downside, an additional breakout of this level could take BTC to the $21,450 mark.
The formation of a bearish absorbing candle indicates a strong selling bias. However, if the candles close above this level, there is potential for a rebound to the $22,800 target or even higher towards $23,750.
Ethereum price
The current market price of Ethereum (ETH) is $1,560 and the 24-hour trading volume is $9 billion. From a technical analysis perspective, the ETH/USD pair has broken a symmetrical triangle, indicating potential for further selling until it reaches $1,560.
If this level is breached, ETH could reach the $1,500 mark. However, there is strong resistance around $1,620 or $1,680.
