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Bitcoin Falls Below $20K as 2023 Rally Reverses
A hawkish Fed, the demise of crypto-friendly Silvergate Bank, and a possible government sale of Silk Road-related bitcoin have given investors ample reason to sell.
Updated Mar 10, 2023, 7:31 p.m. Published Mar 10, 2023, 1:07 a.m.
The price of bitcoin has fallen below the $20,000 level for the first time since mid-January because a wave of bearish news has overwhelmed crypto's strong 2023 uptrend.
The largest cryptocurrency by market capitalization quickly regained some of its lost ground late Thursday (ET) and was recently hovering at about $20,040, down 7.7% over the past 24 hours.
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After reaching a record high of over $69,000 in November 2021, bitcoin tumbled late that year and all through 2022 to begin 2023 at around $16,600. A powerful rally into mid-February had bitcoin ahead more than 50% for the year at one point to $25,000.
Events since have given ample reasons for sellers to emerge. Among them was a stronger-than-expected inflation report that called into question the U.S. Federal Reserve's early 2023 assertion that a disinflation trend had begun. The central bank itself has acknowledged as much, with Chair Jerome Powell earlier this week telling Congress the Fed has far more work to do to bring inflation back to its 2% target.
In addition to interest rate fears, there was the collapse of crypto-friendly lender Silvergate Bank on Wednesday evening. Also on Wednesday, the U.S. Department of Justice moved 49,000 bitcoin seized from darknet marketplace Silk Road to new addresses, suggesting the government may have interest in soon selling that sizable stash.
"Silvergate is one of several factors in bitcoin’s underside test," Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote in an email to CoinDesk. "In addition to Silvergate, there is market concern of greater interest rate hikes by the [Federal Open Market Committee] and softening stock market prices. The [Securities and Exchange Commission] also shows increasing scrutiny of crypto. Taken together, the market has continued to tighten and retest support levels."
DiPasquale added: "As we have stated since January, we believe it will test its support under $20K before moving up again. We see $18K as the next major level of support."
James Rubin contributed reporting to this story.
UPDATE (March 9, 2023, 1:10 UTC): Adds most recent bitcoin pricing.
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