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Bitcoin falls to $20,000 with “little reason to buy.” It could quickly get worse.




Bitcoin

and other cryptocurrencies fell on Friday, with prices under pressure from stress in the digital asset industry as well as losses in broader markets.

The price of Bitcoin has fallen 6% in the past 24 hours to $20,200, with the largest crypto falling to its lowest levels since mid-January and approaching $19,500 in a recent trough. Bitcoin’s big rally to start 2023 — which saw it climb above $25,000 from $16,500 in a matter of weeks, spurring talks of a new bull market — looks vulnerable.

“There have been nothing but negative headlines for Bitcoin and crypto this week,” said Yuya Hasegawa, an analyst at broker Oanda. “There is little reason to buy Bitcoin now that the market is saturated with negative developments, not only specifically for the crypto industry, but also for the broader financial market as well.”[ads1];

The latest catalyst driving crypto down has been losses across the stock market, with which Bitcoin is heavily correlated. The


Dow Jones Industrial Average

and


S&P 500

plunged on Thursday and saw more declines on Friday after big losses at SVB Financial Group (ticker: SIVB ), the owner of Silicon Valley Bank, spurred a wave of selling across bank stocks that hammered broader sentiment.

A US jobs report that did little to resolve the question of whether the Federal Reserve will raise interest rates by a quarter of a percentage point or half a point later this month — a bigger increase would be a bigger headwind — hasn’t helped much. .

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Of particular focus for crypto traders will be the erosion of Bitcoin’s recent support at key price levels. That threatens to undo gains made since the start of this year and even risks a return to multi-year lows from late 2022.

“Bitcoin has a pending breakdown below cloud-based support around $20,300, which will be confirmed on a close below that level today. A breakdown would be a medium-term bearish development, increasing downside risk to the November 2022 low around $15 600, says Katie Stockton, managing partner at technical research firm Fairlead Strategies.

There is reason to believe that the weekend could usher in more volatility.

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Liquidity in digital asset markets has been rock bottom since crypto exchange FTX collapsed in November, with lower trading volume exacerbating moves in Bitcoin’s already volatile price. There is a risk that this will increase because Silvergate Bank discontinued its SEN interbank transfer service, a key part of its market infrastructure, on 3 March. Bitcoin trading volume last weekend was the lowest in months.

“A testing weekend lies ahead,” said Craig Erlam, an analyst at broker Oanda.

Beyond Bitcoin,


Ether

—the second largest crypto lost 7% to $1430. Smaller cryptos or altcoins were slightly better off, too


Cardano

miss 1% and


Polygon

back 2%. Memecoins were deeper in the red, with


Dogecoin

down 9% and


Shiba Inu

reduction 6%.

Write to Jack Denton at jack.denton@barrons.com



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