Bitcoin has dropped below $20,000. Why? There are several reasons. In this article, we will look at the situation that prevails on the market today and answer the question whether the current declines rule out further increases.
Bitcoin price below $20,000
At the time of this writing, the BTC price is $19,700. Just yesterday, it was close to USD 22,000. Over the course of a day, the exchange rate fell by 8%. On a weekly basis, we are already talking about an 11% correction
Moods also deteriorated significantly. The Bitcoin Fear and Greed Index is 34, signifying investor fear. Let’s add that until recently the indicator indicated greed.
Bitcoin Fear and Greed Index is 34 – Fear
Current price: $20,362 pic.twitter.com/5PdN51XXQQ— Bitcoin Fear and Greed Index (@BitcoinFear) March 10, 2023
Ether is no better against this background. 1 ETH on the exchanges today pays 1409 USD (down 8% in 24 h and 10% in 7 days).
Ethereum Fear and Greed Index is 31, which means fear. Here – as in the case of BTC – we are talking about a deterioration in sentiment. Recently, the index indicated greed.
Ethereum Fear and Greed Index is 31. Fear
Current price: $1,439https://t.co/2dR8JNOivahttps://t.co/JQljdRzpUy pic.twitter.com/8aP15RtRRj— Ethereum Fear and Greed Index (@EthereumFear) March 10, 2023
Reasons for declines
What are the reasons for the decline in valuations and sentiment? First of all, it should be pointed out that the cryptocurrency bank Silvergate has ceased operations. The institution fails mainly due to past FTX problems. However, this event again undermines the credibility of the entire market.
Investors are comforted, however, that the bank has announced that all deposits made by customers will be fully repaid. So we won’t have a scandal on the scale of FTX’s collapse.
But that’s not all. Earlier, anxiety among investors – and in all markets – was sown by Jerome Powell. The Fed chairman told the Senate Banking Committee meeting that the US central bank is ready for further interest rate hikes. This means that it will not end with one hike (this is what investors were counting on).
In addition, BlackRock, the world’s largest company specializing in asset management, stated that interest rates in the US may eventually increase to 6 percent. This would mean that there are still a few more hikes of 25 or 50 bp ahead of us (today they are at 4.50-4.75%).
Finally, there were concerns about the legal status of altcoins. Gary Gensler, head of the SEC, recently stated that all cryptocurrencies – except bitcoin – are securities. The case is now before a court in New York.
Is this the end of growth?
Does the current situation, however, preclude further increases? Definitely not. It can even be added that the current correction is healthy for the market and it had to come. Many analysts still emphasize that in the medium and long term we will see significant increases in the BTC market.
Bitcoin has dropped below $20,000. However, this does not preclude increases in the medium and long term. He also maintains that at the end of this year we can see strong increases on the chart.
Currently, the price is falling due to Silvergate problems. This was accompanied by Jerome Powell’s announcements regarding further interest rate hikes.
In my opinion, long-term investors can rest easy. Yesterday’s tumble on the chart has a positive aspect for them – it will once again clear the market of the so-called. “weak hands”
– Mateusz Kara, CEO of Ari10, told us.
