Bitcoin returned to January levels on Friday, falling below $20,000. The leading cryptocurrency traded at $19.9k as anxious investors stewed over persistent inflationary pressure, consequences of the collapse of crypto-friendly Silvergate Bank, and most recently, a New York State lawsuit alleging that ether and other crypto assets are securities.
BTC has now lost over half of its gains from the year’s first six weeks when fervent traders drove the cryptocurrency up by around 40% and past $25K in mid-February.
Stablecoins spared: Stablecoins was the only exception as altcoin prices fell as well. Stablecoins are now being positioned by investors as the main entry and exit points for cryptocurrency trading because of Silvergate’s announcement. Ripple’s XRP fell 7.4%, Binance’s BNB fell 6.4%
Doge Coin and Shina Inu, two meme coins both experienced declines of 11.3% and 10.3%, respectively. 94,524 traders were liquidated on the last day, totaling $309.78 million in liquidations. The greatest single liquidation order, worth $9.49 million, was made on Bitmex. By Thursday’s market close, crypto equities Microstrategy had fallen by 9.4%, Coinbase by 7.8%, and Jack Dorsey’s Block had fallen by 5.3%.
Experts’ opinion: Experts also suggested that a portion of the fall may be attributable to investors’ decreasing appetite for risk as they prepare for the release of tomorrow’s U.S. nonfarm jobs figures.
Ether fell to its lowest point since mid-January, changing hands at about $1,430, closely matching bitcoin’s decline. By the time the market closed, Grayscale’s GBTC had fallen 10.8% for the day.
What you should know: Before crypto banking major Silvergate disclosed operational issues that would prevent it from submitting its yearly financial reports, Bitcoin had been trading at well over $23K earlier in the month. Despite being solvent, the bank on Wednesday formally declared a voluntary wind down of operations.
In the meantime, Jerome Powell, the head of the Federal Reserve, stated on Tuesday that interest rates may need to be raised further to combat inflation, which is still far higher than its 2% target. Over the past 12 months, rising interest rates have proven to be a major drag for both cryptocurrency and tech equities.
Following its Tuesday court appearance with the Securities and Exchange Commission, Grayscale recovered earlier in the week. In June of last year, the asset manager filed a lawsuit against the SEC for denying its request to transform its flagship fund, GBTC, into a spot bitcoin ETF.
While this was happening, bank stocks plunged sharply, with JPMorgan Chase and Bank of America falling more than 5% and 6%, respectively. The S&P 500 and Dow Jones Industrial Average lost 1.8% and 1.7%, respectively, while the tech-focused Nasdaq fell 2.1%. The decrease occurred despite a minor increase in jobless claims, a mildly reassuring development considering the tight labour market that has driven up prices.
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