Bitcoin witnessed a -10.03% price decline in the past 7 days, and this Bitcoin price drop sure had investors and all of Web3 clamoring for breath.
Like any other cryptocurrency, Bitcoin is known for its volatility and dramatic fluctuations over short periods. And this is exactly what happened in recent days! For sure, investing is not for the faint-hearted…
On March 10, Bitcoin price dropped to $19,647 per coin! It’s worth noting that this is the first time since mid-January.
At the time of writing, the dominant coin regained some footing and currently stands at $20,032.17 according to CoinGecko.
Yuya Hasegawa, an analyst at broker Oanda said the following: “There is just little reason to buy Bitcoin now as the market is saturated with negative developments, not just specifically for the crypto industry, but also for the wider financial market as well.”
So, what and who can we blame for the bitcoin price drop in recent days?
History Lesson: Bitcoin Value Drops and Rises
Backtracking to late 2021, Bitcoin reached an all-time high of over $69,000, driven by increased demand from institutional investors and mainstream acceptance of cryptocurrencies.
However, towards the end of the year 2021, it experienced a significant loss of nearly half of its value.
The Bitcoin price dropped due to a combination of factors:
– Concerns over increased regulation.
– A crackdown on cryptocurrency mining in China.
– General market correction.
The price continued to fluctuate, and its value fluctuated between $16,000 and $30,000 for most of the year.
However, in the mid-February bull run, Bitcoin experienced a powerful rally and gained over 50% in value, reaching around $25,000 at its peak.
The reasons for this could be the-then increased institutional adoption, positive news around Bitcoin ETFs, and general bullish sentiment in the cryptocurrency market.
Why did the Bitcoin price drop?
There sure are many incidents that disrupted the crypto status quo in recent weeks. Let’s talk about it!
1- Silvergate collapse contributes to Bitcoin price drop:
On the evening of March 9th, Silvergate Bank, a well-known name in the crypto industry, announced its closure, and its decision to return deposits, citing recent industry and regulatory developments as the reason.
They revealed the news in a statement: “In light of recent industry and regulatory developments, Silvergate believes that an orderly wind-down of Bank operations and a voluntary liquidation of the Bank is the best path forward.”
The bank had been struggling for some time, and its financials were even worse than previously reported, according to a filing on March 1st.
As a result of Silvergate’s closure, the bank’s biggest crypto-industry clients, including Coinbase and Paxos pulled out their deposits.
Consequently, the community raised concerns about where crypto companies will go to get cash. Will this potentially lead to the use of less regulated institutions and increased risk?
The bank is now liquidating its assets in an orderly manner, and its collapse led to increased scrutiny from lawmakers concerned about the potential impact of crypto on the traditional financial sector.
2- NYC-based Attorney General sues KuCoin:
Last Thursday, New York Attorney General, Letitia James, filed a lawsuit against KuCoin, the fourth-largest cryptocurrency platform by trading volume.
The reason? Violating state securities law. This certainly played a role in the bitcoin price drop!
In detail, KuCoin failed to register with the state before allowing investors to buy and sell cryptocurrencies on its platform.
The lawsuit also accused KuCoin of wrongfully calling itself an “exchange”. Basically, they condemned their selling of “KuCoin Earn” to generate income for themselves and investors.
The Attorney General is seeking a permanent injunction to prevent KuCoin from operating in New York until it complies with the law. KuCoin has not yet responded to requests for comment.
Note that it doesn’t stop here! This lawsuit is part of a wider effort to regulate “shadowy” cryptocurrency companies and protect investors.
3- Stronger-than-expected inflation report by the US Federal Reserve:
At the beginning of March, the Federal Reserve chair, Jerome Powell stated that February’s economic data might point towards increased inflation.
Further, the Fed chair said that if the data reveals increased inflation, the interest rate will also be increased.
Hence, the upcoming February CPI report and economic data are said to play a key role in deciding further Bitcoin price drop/rise action.
Add to the above triggers the fact that the liquidity in digital asset markets has been at rock bottom since FTX collapsed in November and crashed the NFT market along with it.
Obviously, there is a viable reason to believe that the weekend could drag in more volatility. What does the future hold for NFTs and the crypto industry?
Stay tuned for more updates on the situation!