Bitcoin (BTC) struggled to regain support at $20,000 at the Wall Street open on March 10 as fears of contagion from Silicon Valley Bank (SVB) mounted.
A trader sets the price of BTC at USD 18,000
Data from Cointelegraph Markets Pro and TradingView followed the BTC/USD pair as it suffered further losses, hitting $19,569 on Bitstamp.
Before the opening of the day on Friday, the pair had suffered further falls, since SVB Financial had lost another 60% of its value.
In a move that mirrored Silvergate, the banking partner of many exchanges, SVB also began triggering ripple effects for foreign banks on the day.
For Michaël van de Poppe, a Cointelegraph contributor and founder and CEO of trading firm Eight, history was written.
“First it was Silvergate, then Silicon Valley Bank and now First Republic Bank. All markets crashing massively. It’s 2008 again,” summarized.
With this, US equities began the March 10 session in the red as nervous traders waited to see the full extent of the SVB contagion.
Is a banking crisis beginning to hit?
Japanese banks DOWN 5%-6.2%.
Bank of America DOWN 6.2%
Barclays DOWN 6.2%
JPM DOWN 5.4%
Wells Fargo DOWN 6.13%
The dogs which are not barking in the night are Eurozone G-SIBs… Yet!— Alasdair Macleod (@MacleodFinance) March 10, 2023
“Both Silvergate and Silicon Valley apparently invested in low-yielding Treasuries before the Fed tightening cycle… Treasuries no one would want to buy now with 5% ‘risk-free’ Treasuries directly from the government,” affirmed part of the comments of the traders and analyst; Scott Melker.
“They were forced to sell at deep discounts, taking massive losses. This further shakes the faith of the market, prompts more withdrawals and leads to insolvency.”
Melker said the montage was a “slippery slope”.
As for BTC price developments, van de Poppe was targeting levels as low as $18,000 for a potential long entry. Above $20,000, on the other hand, was now an opportunity to go short.
Levels I’d be looking at with #Bitcoin:
– Potential shorts around $20.6K and/or $21.4K.
– Potential longs at $18.1-18.6K including bull. divs and/or HL confirmation. pic.twitter.com/CifRSlaHQW—Michaël van de Poppe (@CryptoMichNL) March 10, 2023
Analysts see increased pressure on the Fed
The commentator, Holger Zschaepitz, described US jobs data as “mixed”, which helped allay fears of a significant change in Federal Reserve policy.
“Following today’s jobs data, traders are pricing in a 25 basis point hike from the Fed in March. Previously, the 50 basis point idea had already been priced into the market,” added on Twitter the popular analysis account Tedtalksmacro, which also qualified the mixed data.
Data from CME Group’s FedWatch tool confirmed the change in market expectations for the upcoming Federal Open Market Committee (FOMC) meeting, scheduled for March 22.
For some, however, the extent of the SVB crisis gave reason to believe that the Federal Reserve would have no choice but to abandon its monetary tightening and change its mind about raising interest rates.
“SVB is facing an all-out attack on the bank. The bad news is that this is going to escalate very quickly into a systemic crisis,” reacted businessman, David Bailey.
He added: “The good news is that the Fed will have no choice but to pivot imminently or risk the entire financial system imploding.”
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