Cryptocurrency
Why Bitcoin fell: market review and forecast
Bitcoin started Friday with a fall. Why does Bitcoin fall? In a few hours, the BTC exchange rate fell by more than 6% to levels last seen on February 14, 2023, after which it went into a correction. The cryptocurrency is trading at $22,373.
Following Bitcoin, many other coins also showed negative dynamics. The cryptocurrency’s collapse, currently, continues. Why did Bitcoin fall?
Why did the Bitcoin price fall?
Bitcoin fell amid an extremely negative news backdrop. Let’s take a look at what may have contributed to the deterioration in investor sentiment.
Major crypto bank Silvergate Bank may declare bankruptcy. Such rumors have been circulating on the network amid the delayed publication of the company’s annual report. Many market participants reacted to the news by severing ties with Silvergate Bank. Among others, LedgerX and Coinbase rejected the bank’s services. Many other market participants, in turn, were quick to deny any ties with the cryptocurrency bank.
Many market participants believe the collapse of Silvergate will put pressure on the digital asset market. For example, analyst Adam Cochran believes that the bank’s demise will trigger a “death spiral” that will likely victimize others in the crypto industry. In his opinion, market participants do not realize how much the crypto business depends on Silvergate.
At the same time, there are also opinions in the network, according to which the bank’s demise will not put serious pressure on the market. For example, Samson Mou, a popular investor and businessman in the cryptocurrency community, holds this view.
Why did Bitcoin fall – Binance under the gun
The pressure on Binance, the largest cryptocurrency exchange, continues. On March 2, the media reported that a group of U.S. senators asked for financial statements from the trading platform. Representatives of the regulator are interested if Binance uses illegal business practices.
Stock market pressure
The stock market continues to fall in anticipation of a further increase in the Fed’s key rate amid the regulator’s fight against inflation. The S&P 500 broke through the support (green line) and rushed again to the border of the descending channel (red line), in the “body” of which the index moved from early 2022 to the end of January 2023.
Other pressures
Regulatory activity is also adding to the negative news backdrop. The crypto industry is threatened by the recognition in the U.S. of all cryptocurrencies, except Bitcoin, as illegally issued securities.
There is a clear trend of increased regulatory oversight of the crypto industry around the world. For example, in early March, it was reported online that British banks had begun to limit their customers’ ability to buy cryptocurrencies.
Earlier, we reported that Binance is launching an artificial intelligence tool for NFT Bicasso generation.
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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