BTC falls below $22,000, Ethereum is falling too - Here are the reasons

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In the last few hours, the price of bitcoin has seen the sharpest drop since the fall of FTX. Bitcoin dropped $1,300 within an hour, briefly falling below $22,000. In particular, the price drop coincides with the start of trading in Hong Kong.

What Causes the Bitcoin Crash?

Many suspect that the reason for the slump in the price of Bitcoin is the uncertainty that arose yesterday regarding the Silvergate bank. It plays an important role in providing liquidity to the market as it provides a gateway to the fiat money system.

The bank yesterday delayed its filing with the Securities and Exchange Commission (SEC). Concerns about financial difficulties caused the bank’s share price to fall by more than 50%. Several crypto companies subsequently ended their dealings with the bank, including Coinbase, Paxos, Kraken, and Galaxy Digital.

However, it would be too easy to discount the price drop for this reason. As analyst Miles Deutscher comments on Twitter, the headwinds for the crypto market are piling up at the moment. In addition to Silvergate, these include Mt Gox payments, ETH unlocking via Shanghai upgrade, hot CPI (50bps now a real possibility), mass liquidations and stock market weakness. German added:

“Note that not all of these factors necessarily have a substantive basis. However, they do not necessarily lead to a reduction in risk. I think a combination of these factors led to a correction, with liquidations exacerbating price action.”

The crypto headwinds are increasing, and may explain the reason for the recent selloff.
• Mt. Gox $BTC unlock
• Gil Gate
• Shanghai $ETH unlock
• Hot CPI (50bps now a real possibility)
• Asia selling open
• Mass liquidations
• Stock market weaknesses (red futures)
— Miles Deutscher (@milesdeutscher) March 3, 2023

In particular, the massive liquidation of the long sites may have played a major role in the crash being so severe in such a short period of time. According to data from CoinGlass, over $205 million worth of long positions have been liquidated across the crypto market so far. Most of the long positions, worth $185 million, were liquidated in 45 minutes. Bitcoin saw the highest liquidations worth $73 million.

Bitcoin Crash: Binance Spots a Responsible Whale?

“Skew” Analysts also note anomalies in bitcoin spot CVD buckets and delta orders, referring to the chart below. According to the analyst, a large sell-off on the Binance spot has led to a long liquidation cascade:

“As you can see here, Binance Spot was deleted 1 minute before every exchange on the other spot. There is a lot behind this sale. (Probably someone out cryptocurrency today). Prime price $22K”

$BTC CVD Spot Buckets & Delta Orders
As you can see here Binance Spot nuked 1min before all other spot exchanges.
A significant amount behind this sale. (Someone probably left crypto today)
Main price $22K https://t.co/dFU2OEvTOX pic.twitter.com/j2IlwNMAiz
— Skew Δ (@52kskew) March 3, 2023

Chain analysis firm Santiment also writes that it has been more than 4 months since Bitcoin fell by 5% or more in one hour. Until now. Santiment added:

“A quick recovery will depend on the level of concern shown by the crowd, allowing whales to reach weak bases.”

📉 It’s been 4 months #Bitcoin dropped 5% or more in one hour. But an hour ago (1am-2am UTC), we saw this streak broken. A quick recovery will depend on the anxiety of the crowd, allowing the whales to reach weak bases. https://t.co/rDqnHuU8y7 pic.twitter.com/D0L5FNsN9o
— Santiment (@santimentfeed) March 3, 2023

Should you buy Bitcoin now?

Anyone who is not afraid of an upcoming correction can buy Bitcoin today. However, according to forecasts, Fight Out Coin (FGHT) may have a better risk-reward ratio: The crypto project is developing a move-to-earn ecosystem that rewards athletes for training progress with cryptocurrency – and the success at the same time to transmit a digital avatar. Web3’s fitness goes, so to speak. 1 FGHT currently costs 0.02610 USDT, in six hours the price will rise.

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Text credit: Newsbtc

Last updated on March 3, 2023