Bitcoin has broken below $20,000US and has reversed more than half of the gains in the spectacular beginning to 2023.

Bearish momentum in crypto and indices continue to mount following an unexpected increase in Hawkishness from the Fed.  On Wednesday, Federal Reserve Chair Jerome Powell announced that a more than expected rate rise is likely. According to CME group, 63% of investors are forecasting a 50bp increase.

The market meltdown was exacerbated on Thursday, when crypto bank Silvergate announced that it would wind down operations and liquidate its bank. The collapse of FTX had triggered a series of catastrophic events for the Bank, and eventually resulted in a bank run led by Coinbase, Paxos, Galaxy Digital and Crypto.com. The company was forced to sell off its assets at a steep discount to cover $8bn in withdrawals. The company’s stock is down 97% from 2021 peak.

Further crypto market moving news came this morning, when the New York State Attorney General (AG) files suit against Seychelles-based Crypto exchange KuCoin, claiming that it was in violation of securities laws by offering unregistered securities – crypto tokens which included Ethereum. The claims shocked the market, representing the first time regulators have claimed Ether to be a security.

Over the past 24 hours, crypto bulls have suffered major losses, with Coinglass showing over $300m in liquidations and more than $119m from BTC alone. Over $275m of these positions were longs.

Current psychological support is provided by the 0.618 fib retracement level while the 14 day RSI has dipped below 30 to indicate oversold. On the hourly chart, the MACD has begun to lose bearish momentum and the RSI indicates that BTC is deeply oversold. A break of the current $19,800 level could see further pain down until the $18,000 level. However, the retracement should be temporary, and provide the necessary liquidity for institutions to buy before the bull run.

Bitcoin teeters on the edge of $20,000, how much more pain?

Mar 10 2023