Why did the price of bitcoin fall?

On the morning of March 3, the bitcoin rate fell by $1.2 thousand within an hour. The cost of the first cryptocurrency decreased by 5%, dropping from $23.4 thousand to $22.2 thousand. According to CoinGecko, at 20:40 Moscow time, the asset is trading at $22 .4 thousand, the daily decrease is 3.7%.

Cryptocurrency rates began to fall at 4:00 Moscow time – this is the opening time of exchanges in Singapore and Hong Kong. The total market capitalization of the crypto market decreased by 5.3% in an hour, from $1.12 trillion to $1.06 trillion.

Against the backdrop of a sharp decline in prices for cryptocurrencies, the positions of traders who traded with leverage were liquidated. According to the Coinglass service, transactions worth $221 million were forcibly closed over the past 12 hours. The largest number of liquidations occurred in pairs with bitcoin – $79 million, followed by Ethereum with a loss of $45 million.

Interviewed RBC Crypto experts commented on the sharp price decline and named the factors influencing the behavior of the crypto market.

“Crypto companies have even fewer partners”

ENCRY Foundation co-founder Roman Nekrasov

Investor sentiment has been volatile over the past week due to data of larger-than-expected growth in US household consumption (PCE). This index suggests that inflationary risks remain, which increases the chances of raising the key rate at the next meeting of the US Federal Reserve. For almost the entire week, the crypto market managed to hold on and not succumb to the pressure of the bears.

But yesterday’s reports of problems with the Silvergate bank acted as trigger news, and the crypto market succumbed to a small wave of panic, which led to a sharp drop in the price of bitcoin by 5%.

The bank was engaged in servicing crypto companies, but due to regulatory uncertainty and increased risks associated with crypto assets, it is reducing its presence in the crypto market. This means that crypto companies have even fewer partners from the traditional banking sector.

In the short term, this may still affect the bitcoin rate, but it is unlikely to be significant. The current price already takes Silvergate into account. The main event for the crypto market this month is the Fed meeting on the key rate on March 21-22.

“Possible slight rebound”

Head of Analytical Department AMarkets Artem Deev

The fall of bitcoin occurred against the backdrop of events around the Silvergate cryptocurrency bank, which refused to publish annual financial statements and announced problems. The bank is now assessing losses for the past year and is considering the possibility of continuing business.

This news was a strong negative for the market, which led to the fall of bitcoin and other currencies. Everyone is afraid of a repeat of the situation with the collapse of the FTX exchange, Coinbase, Circle, Paxos, Crypto.com, Gemini, Bitstamp and Galaxy Digital have already abandoned operations with the bank.

As expected earlier, the crypto market will show growth in the absence of negative news, and decline with such statements. There are still fears that the collapse of FTX has launched a chain reaction in the market, investor confidence in crypto assets is being lost, which causes an outflow of funds from the market and “drops” currency quotes.

Most likely, now bitcoin will fluctuate around $20-22 thousand. If there is no new negative information, a slight rebound is possible. Otherwise, there are no fundamental positive moments for the market growth yet.