After failing at resistance around $25,000, Bitcoin (BTC) finally fell back heavily today. What are the possible reasons for this sudden drop? We see this together.
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Bitcoin (BTC) corrects sharply
After a phenomenal month of January and a month of February of consolidation, the cryptocurrency market starts March in the red. The price of Bitcoin (BTC) fell 4.7% since the beginning of the day on March 3 and is trading for $22,300 at the time of this writing.
This fall was relatively brutal since it took place at 2 am and occurred in less than an hour. The price of the market’s main digital asset is now changing at a local low since February 14. The capitalization of the entire market fell by 3.8%, or approximately $45 billion.
Evolution of the price of the BTC/USD pair in 1 hour
From a macroeconomic point of view, the indicators are rather pessimistic for risky assets and more mainly the cryptocurrency market. Between the probability of a growing recession over the next 12 months and the inflation figures which are struggling to decrease, as mentioned by Vincent Ganne in his analysis of the day, Bitcoin has been doing quite well so far.
Such a correction was expected by many analysts and investors, explaining the profit taking in February. Nevertheless, it seems that an aggregate of news items has precipitated the fall of the crypto market.
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Silvergate, FTX, an explosive cocktail
For many, the main reason for this fall comes from Silvergate. This banking institution, partner of many important players in the cryptocurrency industry, recently announced that she was going through some tough times.
Already in a tense situation, Silvergate unveiled that she would not be able to provide her Form 10-K to the Securities and Exchange Commission (SEC) within the time. Note that this document provides information on the financial health of the entity.
Chronology of the last 24 hours:
1. #Coinbase suspends payments through Silvergate
2. #Crypto․com suspends payments through #Silvergate
3. #FTX confirms 8.9 billion missing funds
4. Total #cryptocurrency market capitalization loses over 50 billion pic.twitter.com/h304KH1qqv
— Giancarlo Cecco (@GiancarloCecco) March 3, 2023
In the space of just one day, shares of Silvergate Capital (SI), Silvergate’s parent company, fell nearly 60%. In the process, Crypto.com, Coinbase and other partners suspended their collaboration with Silvergate. It was this announcement that certainly precipitated the fall of Bitcoin.
Silvergate’s refusal to release its Form 10-K confirms the rumors circulating about his solvency and his involvement in the FTX affair. This directly threatens the main cryptocurrency exchange platforms that collaborated with the banking institution.
At the same time, the new CEO of FTX announced that he had finished reviewing the accounts. Of more than $11 billion owned by customers, about 8.9 billion have completely disappeared. A hole in the coffers that despairs investors still dreaming of a refund of the exchange.
👉 To go further: Doubt settles on Bitcoin (BTC)? – On-chain analysis
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Journalist for Cryptoast, I strive to dissect every detail of the exciting world of cryptocurrencies and make it accessible and understandable to as many people as possible.
Lilian Aliaga
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