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Crypto Hit by Further Negative News

Following a strong start to the year, crypto assets have come under heavy selling pressure in recent weeks as fears over another potential contagion event within the sector cause uncertainty. Silvergate Bank issued a warning at the end of last week over the viability of its business and suspended its crypto payments system simultaneously. The bank noted its decision to discontinue its flagship Silvergate Exchange Network (SEN) over business risks linked to the system. Shares in Silvergate plunged in response to the news while leading crypto assets such as BTC, ETH, and LTC each came off sharply also.
 

BTC Slumps from Highs

On the back of the news, big crypto stocks have also come under heavy selling pressure as traders digest the latest negative headlines to hit the sector. Following the post-FTX rebound, it seems that traders are looking to cover their exposure quickly in the face of another disaster with BTC dropping around 7% from last week’s highs.
 

Near-Term Risks

While the decline has stalled for now, the near-term risks look skewed to the downside for BTC. Upcoming comments from Fed’s Powell as well as the latest US labor data on Friday both have the potential to drive a fresh rally in USD which will further weigh on BTC near term. The main hope for crypto bulls now is some visible pushback from Powell against hawkish Fed expectations alongside weakness in Friday’s data which would see USD trading lower near-term.
 

Technical Views

Bitcoin

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The failure at 24930 has seen the market reversing sharply lower. Price is currently testing below the 22600 level and, with momentum studies turned bearish, the focus is on a test of the 20575 level next while price remains below. 

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