Bitcoin (BTC) has struggled to reclaim the $20,000 support level since the Wall Street open on March 10 due to fears over Silicon Valley Bank (SVB) contagion, according to reports. Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching $19,569 on Bitstamp. The pair had seen further downside prior to the open as SVB Financial saw another 60% wiped off its stock price. SVB also began to spark knock-on effects for non-US banks on the day.
For trading firm Eight’s founder and CEO, Michaël van de Poppe, the situation was reminiscent of the 2008 financial crisis, which he summarized as, “First it was Silvergate, then Silicon Valley Bank and now First Republic Bank. All sinking massively on the markets.”
US equities started the March 10 session in the red as nervous traders waited to see the full extent of the SVB contagion. On the same day, Japanese banks recorded a 5-6.2% drop, while Bank of America, Barclays, JPM, and Wells Fargo all recorded falls of between 5.4% and 6.13%.
In terms of BTC price action, van de Poppe eyed levels as low as $18,000 for a potential long entry. Above $20,000, on the other hand, was a short opportunity.
Markets commentator Holger Zschaepitz pointed to “mixed” US jobs data as a silver lining, helping to allay fears of a significant policy shift by the Federal Reserve. Data from CME Group’s FedWatch Tool confirmed the switch in market expectations for the upcoming Federal Open Market Committee (FOMC) meeting due on March 22.
However, some observers believe that the extent of the SVB crisis means that the Federal Reserve will have no choice but to abandon its monetary tightening and “pivot” on interest rate hikes. Crypto entrepreneur David Bailey said that SVB was “dealing with a full-blown run on the bank,” and that while the bad news is that this will accelerate very quickly into a systemic crisis, the good news is that the Fed “will have no choice but to pivot imminently or risk imploding the entire financial system.”
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
