Bitcoin (BTC) experienced a sharp drop in value early on Thursday, as the crypto-friendly bank Silvergate Capital (SI) lost more than 50% of its value amid concerns that it might not survive. This caused a barrage of liquidations and a sharp decline in the price of Bitcoin across all crypto markets. While Bitcoin slipped from $23,443 to $22,259, $250 million in cryptocurrency holdings were liquidated, with the most affected traders being those who were long Bitcoin and Ethereum, with $76 million and $40 million in liquidations, respectively.
Despite 2023 starting off strong, with BTC being up 34.8% for the year, the dramatic decline had no clear reason, although economic headwinds continue to affect the crypto markets. The decline may also be due to the possible aftereffects of the Silvergate fiasco, which recently declared that it will need to perform a new audit to determine its viability following the collapse of FTX.
In contrast to the FTX collapse in November, which caused bitcoin to plunge to multi-year lows, the impending Silvergate issues had minimal impact on the largest cryptocurrency in the world by market value. On Thursday, the price of bitcoin stayed at $23,000.
According to the anonymous trader and analyst Credible Crypto, BTC has reached low-time-frame support at $22,243 and must maintain the level to prevent a further decline. "There is our drop to low-time-frame support as expected. Now bulls have to make a stand here. If they fail to, then my downside target will be met sooner rather than later… I will also add that until/unless we break the lows at $21,373 I lean bullish (green path)," he wrote.
The market has been volatile lately, with cryptocurrency prices fluctuating wildly due to various factors, including regulatory uncertainty, economic conditions, and individual company issues. As such, investors and traders should exercise caution when investing in cryptocurrencies and be prepared for sudden price swings.