- Bitcoin finds support at $20,000
- Many cryptocurrency companies have approached SVB
- Bitcoin Investors Should Keep an Eye on the S&P 500 and the Fed
Cryptocurrency investors are having a rough 2022. Bitcoin and other major cryptocurrencies fell on the back of the FTX failure, triggering a loss of confidence in the industry.
But the market started 2023 on a strong note. For a while, Bitcoin was trading above $25,000 in February, and just a few months ago, the price was below $17,000.
Enthusiasm quickly faded, though. Bad news weighs on Bitcoin again. First, Silvergate Capital, a leading banker in the cryptocurrency industry, announced that it would be liquidating its bank. Hit hard by FTX’s bankruptcy, it closed the bank.
Second, Silicon Valley Bank collapsed on Friday. The bank run triggered the second-largest bank failure in U.S. history, and its effects spilled over into the cryptocurrency market, as SVB is popular among cryptocurrency companies.
BTCUSD chart by TradingView
Bitcoin finds support at $20,000
After falling to $25,000 in February, Bitcoin began to give back some of its 2023 gains. A break below $22,000 opened the door for a quick drop to $20,000, where the market found support in the round figure.
Bitcoin’s volatility is well known. Unfortunately, such sharp falls or rapid rises are not uncommon in the cryptocurrency market.
Still, even after the recent dip, Bitcoin still has a big upside in 2023. Its year-to-date performance is 23.62%, which is remarkable given the volatility affecting investor trust.
Recently, Bitcoin has also experienced an unusually high correlation with the U.S. stock market. Therefore, investors in the cryptocurrency market are also looking at the S&P 500. The stock market struggles to bounce back due to the Fed’s tightening cycle — and so does Bitcoin.
Looking ahead, it remains to be seen how the Fed responds to the SVB failure. Also, what will it do at the March meeting – raise the funds rate by 25 basis points or 50 basis points? Until then, the price of Bitcoin may be in for a longer period of consolidation around $20,000.
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Source of information: Compiled from COINJOURNAL by 0x Information.Copyright belongs to the author Mircea Vasiu, without permission, may not be reproduced