Why is the price of bitcoin falling today?
The price of bitcoin dropped today due to liquidity issues at Silvergate Bank coupled with a cascade of trading margins, putting pressure on the crypto market.
Bitcoin (BTC/USD) daily chart
Source: Trade review
bitcoin It dropped 5% in one hour overnight on March 3rd, falling to its lowest level in more than two weeks, according to data from Cointelegraph Markets Pro and TradingView.
The top cryptocurrency has joined Ethereum and other big altcoins in a sharp drop, fueled mainly by Silvergate bank concerns.
Analysts continue to monitor how the movement will develop after BTC/USD held $22,000 as support. Some are calling for calm, while others believe that bitcoin is yet to face a deeper correction.
Silvergate reprises the aftermath of FTX
The main topic of conversation – and a source of pain for bitcoin bulls – has to do with the Silvergate bank.
Officially a banking partner of many of the biggest names in the crypto industry, they have begun to scale back or end their partnerships with Silvergate due to the possibility that it is “less than well capitalized”.
The words came from the bank itself, which this week filed its deferred 10-K annual report with the US Securities and Exchange Commission (SEC).
Following this move, the American exchange Coinbase announced that it would stop using Silvergate, and Crypto.com later followed suit.
The stablecoin giant Circle later stated that it was “sensitive to concerns about Silvergate” and “is in the process of decoupling some services from them.”
This episode marks the latest part of a long-running fiasco that began with the bankruptcy of the FTX exchange, which has affected many crypto firms.
Shares of Silvergate’s parent company Silvergate Capital (SI) fell almost 60% on the stock market to an all-time low. Commentators point out that bitcoin, however, managed to avoid significant damage.
“The fall of Silvergate and the loss of their banking operations did not affect Bitcoin,” Samson Moe, CEO of crypto technology provider Blockstream, responded on Twitter.
“The collapse of the fiat banking system for exchanges will mean buying/trading will move to P2P. Just like in China. There is still a robust P2P trading ecosystem that no longer has an exchange.”
Another article argued that “what’s happening to Silvergate right now could happen to any bank.”
“Be your own bank,” Moe added.
The price of bitcoin was no longer supported
For some traders, the fall of bitcoin was already a matter of time.
The price of BTC has spent weeks trying to overcome resistance above $25,000 without success, resulting in the most stagnant month on record.
Considering that whale liquidity on exchanges also may have contributed to the lack of organic price movement, the drop was not a surprise.
“As expected, our support for ltf has dropped – bulls should now take position here,” the popular Credible Crypto trader wrote in an update.
“If they fail, then my goal will be reached sooner rather than later.”
The attached chart shows this target hovering around the $20,000 mark, a key psychological level originally restored as support in January.
Annotated BTC/USD chart
Source: Credible Crypto/Twitter
Margin call smokes out bulls with leverage
Meanwhile, trading resource Skew has been watching one trade in particular that it believes caused most of the sharp drop to multi-week lows in BTC/USD.
“There’s not a lot of compression here, but there’s a big cascade of fields,” he said.
“This move was driven by a large spot sale by Binance directly into the cumulative buying zone. Requiring additional security.”
Annotated BTC/USD chart
Source: Skew/Twitter
Indicative of how unprepared most traders are for a pullback, liquidation of long positions reached multi-month highs on March 3rd.
According to data from Coinglass, liquidation of long BTC positions alone at the time of writing amounted to $72.9 million. The inter-crypto liquidation totaled $205 million.
BTC clearance chart
Source: Coinglass
“Bybit longs have been completely smoked out, probably a short-term bottom here,” macro commentator Tedtalksmacro replied.
William Subberg, Cointelegraph
William Subberg got into bitcoin when he got his master’s degree and has never looked back since then, writing about everything related to cryptocurrency that turns him on and attracts attention. He started working with Cointelegraph in October 2013.
The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, so you should do your own research when making a decision.
Keep your cryptocurrency safe!
The Ledger Wallet is the most advanced storage device for securely storing and using Bitcoin and other cryptocurrencies.
Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell foreign exchange contracts, CFDs and cryptocurrencies. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no liability for any direct, indirect or consequential damages that may result from anyone relying to such information.