There is more pain for Bitcoin (BTC) when the price of the leading cryptocurrency fell below $20,000 on Friday.
As of this writing, Bitcoin is down 8.3% on the day, trading at $19,900, the level last seen on Jan. 13, according to Coingecko.
Ethereal (ETH) is following a similar pattern, as the price of the world's second-largest cryptocurrency is down 9.8% in the past 24 hours, changing hands at a nearly two-month low of $1,383.
In a notable turnaround in the fortunes of the broader crypto market, which started the year with some large profitsPushing Bitcoin near $25,000, the latest downtrend also saw the broadest market cap of any cryptocurrency. fall below $1 trillion for the first time since January 19.
Bitcoin, Ethereum in free fall
The industry has been hit by some serious headwinds in recent weeks, with the collapse of crypto-friendly Silvergate Bank, which went into voluntary liquidation on March 8, possibly one of the main drivers of the last recession.
Silvergate has been providing a convenient banking avenue for many cryptocurrency businesses, however, โwithout the ability to funnel fiat into the world of cryptocurrency, cryptocurrency seems more like a calm pond than a shining source of innovationโ said Matrixport's head of research, Markus Thielen. in its last note.
โSilvergate has not only been the most important link between investors who wanted to funnel money into cryptocurrency exchanges, cryptocurrency hedge funds, cryptocurrency venture capital funds and cryptocurrency projects, but the bank has also offered to settle balances between the Silverbank customers at any time of the day, including weekends and holidays," he wrote.
Kaiko research director Clara Medalie echoed Thielen's comments, saying that "the Silvergate collapse has undoubtedly had the biggest impact on market sentiment."
โWhen the news first broke, markets had not realized the extent of Silvergate's impact on the entire crypto ecosystem, but in recent days, traders have priced in the collapse,โ Medalie said. decipher. "There are broader fears that the Silvergate collapse could affect the bank's willingness to work with cryptocurrency companies, which essentially takes us back to before 2017, when the industry was struggling to establish banking relationships."
According to the Kaiko analyst, โwith fewer fiat on-ramps, institutional investors will have a harder time deploying capital into crypto markets, which could have a broader impact on market liquidity and efficiency.โ
Bearish pressure beyond Silvergate
Adding more pressure on the infant industry, the US Treasury Department on Tuesday proposed a 30% excise tax on the cost of powering Bitcoin mining facilities, while the New York Attorney General's office filed a lawsuit against cryptocurrency exchange KuCoin for allegedly violating securities and commodity laws in the state.
In the complaint, Attorney General Letitia James also alleged that Ethereum โis a speculative asset that relies on the efforts of third-party developers to generate profit for ETH holders,โ and as such is a security.
โIt is not surprising to see the recent decline in the cryptocurrency market. President Biden's recent proposal to impose a 30% tax to reduce mining activity within the United States has undoubtedly played a significant role in this decline,โ said Jeff Mei, chief operating officer at crypto exchange BTSE. decipher.
According to Mei, โthis tax proposal has raised concerns among investors, who fear it could lead to decreased profitability and lower adoption of crypto mining in the US.โ
Mei also cited the recent lawsuit filed against KuCoin by the New York Attorney General's Office and Fed Chairman Jerome Powell's aggressive comments regarding a possible rebound in inflation among the reasons that have also contributed to the decline. From the market.
According to the COO, all of these factors combined have created โa perfect storm,โ which eventually led to the biggest cryptocurrency market crash this year.
However, BTSE remains bullish on the long-term prospects of the crypto market.
โWe see progress in regulatory clarity and infrastructure building around the world, especially in Asia, putting the industry on a great path for future innovation and adoption,โ Mei said. decipher.
