Last year, the crypto industry experienced a series of setbacks, with many companies and internal projects closing down, causing prices to drop, numerous bankruptcy filings, and as expected, investors suffered heavy losses.
The year started off well, but cryptocurrencies have taken another hit. This time, the most obvious reason comes from outside players.
All of the above factors have hurt the performance of Bitcoin and most altcoins, resulting in a general shift in market sentiment.
Bitcoin in Banking Problems
In the first few weeks of 2023, BTC finally breached the $17,000 mark, sparking a small bull run that took the asset above $25,000 in February. After a nearly 50% increase this time around and a multi-month high, the Fear and Greed Index jumped from visceral “fear” and “extreme fear” to greed.
However, while many industry experts say that the bear market is finally over and that BTC may return to new highs, the cryptocurrency king cannot remain optimistic. In contrast, the asset stalled before falling to around $22,000.
More halvings have occurred for a variety of reasons, from the US government selling bitcoin confiscated from Silkroad on Coinbase, to further interest rate hikes. More than that, the market continues to have some unexpected problems. Major commercial bank Silicon Valley Bank collapsed on Friday after being unable to raise more capital.
At first, many thought that this would really benefit major cryptocurrencies, as even giants from the world of traditional finance could collapse as easily and violently as the Terra ecosystem. After all, as an alternative, BTC rallied after the largest bank crash in U.S. history. SVB is the second major crash of its kind.
However, it turned out that several cryptocurrency companies had failed banking exposures. One of the most well-known names is Circle – an industry giant, after the second largest stablecoin USDC. When news broke that the firm was holding at least $3.3 billion in SVB, the stablecoin lost its peg and plummeted below $0.9.
back to fear
All of this has affected the price of BTC, which fell to $19,500 yesterday — a two-month low. Naturally, the overall sentiment shifted again, as indicated by the Fear and Greed Index.
The indicator takes into account various factors such as volatility, social media commentary, surveys, etc., down to a low of 33 – a state of fear. In contrast, the index was above 55 in February, indicating a greedy sentiment, and last week was around 50 – a neutral level.
smallfear and greed belong bitcoin | Source: alternative.me
- SVB Forced Shutdown Marks Second Largest Bank Failure in U.S. History, Bitcoin Slightly Up
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- U.S. lawmakers urgently meet with Fed, FDIC over SVB collapse
According to Crypto Potato