Bitcoin (BTC) has seen a sharp decline in price, falling below the $20,000 level for the first time since mid-January. The largest cryptocurrency by market capitalization has dropped 7.7% in the past 24 hours and is currently hovering around $20,040. After reaching a record high of $69,000 in November 2021, bitcoin has been on a downward trend, beginning 2023 at around $16,600. However, a powerful rally in mid-February saw the cryptocurrency surge more than 50% to $25,000. Despite this, the bearish news has caused the price of bitcoin to fall below the $20,000 mark.
The recent inflation report has caused a stir in the markets, with the Federal Reserve acknowledging that it has more work to do to bring inflation back to its 2% target. This has caused sellers to emerge, as investors fear rising interest rates. Adding to the uncertainty is the collapse of crypto-friendly lender Silvergate Bank and the U.S. Department of Justice’s move to transfer 49,000 bitcoin seized from Silk Road to new addresses, suggesting that the government may be looking to sell its sizable stash. All of these factors have created a volatile environment for crypto investors, with the potential for further market disruption.
Silvergate is one of several factors contributing to Bitcoin’s recent test of its support levels. Market concerns of higher interest rates, a softening stock market, and increased scrutiny from the SEC have all contributed to the market tightening and retesting support levels. According to Joe DiPasquale, CEO of crypto fund manager BitBull Capital, Bitcoin is expected to test its support under $20,000 before moving up again, with $18,000 as the next major level of support.
