All that talk of bitcoin’s historically low volatility went out the window this morning after the benchmark cryptoasset took a sharp dive on the markets in the early Friday hours, with close to 5% wiped from the BTC/USDT pair.
Pretty much all of those US$1,500 dollars occurred in a single hourly timeframe, between midnight and 1am UK time.
Around US$200mln in BTC longs got margin called at precisely the same time, lining up fairly square with the opening of the Asia trading window.
Support kicked in at just below US$22,000 and some upward correction is already being observed.
Bitcoin’s big dip – Source: currency.com
Contagion fears appeared to have flared up again, namely the shaky ground prominent (once-prominent, at least) cryptocurrency-focused banking company Silvergate Capital Corp has found itself on.
Silvergate’s huge financial losses may impact the crypto bank’s ability to continue ‘as a going concern’, the company told the US Securities and Exchange Commission (SEC) yesterday, after which nearly half its value was wiped from the New York Stock Exchange.
Now Coinbase, which used Silvergate to handle cash transactions for customers, tweeted that “in light of recent developments and out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate”.
We all know what can happen when a major crypto firm goes bust (hello FTX). Clearly, Silvergate clients are rushing for the exits, in something of a self-fulfilling tailspin.
At Coinbase all client funds continue to be safe, accessible & available.
In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
— Coinbase (@coinbase) March 2, 2023
Tight economic data released yesterday, i.e. Europe’s higher-than-expected inflation read and US’s persistently strong labour market numbers, are also likely to be weighing down on risk asset prices.
Ethereum (ETH) duly followed BTC with a 5.5% dip to US$1,545 before buyers pushed the ETH/USDT pair back closer to US$1,570.
Traders now face a choice: Recognise the dip opportunity and go long, or wait out to see where the macro pressures take bitcoin and ether next.
In the altcoin space
Unsurprisingly, all large-cap altcoins proceeded to tumble in value. Ripple (XRP), Cardano (ADA), Polygon (MATIC), Solana (SOL) and Polkadot (DOT) all suffered mid-single-digital losses when Asian markets kicked into gear.
A few niche tokens entered the top-100 set, namely SSV and Yearn Finance (YFI). Both are decentralised finance (DeFi) protocols for staking and lending respectively, .
DeFi staking protocol Lida (LDO), the largest DeFi protocol by total volume locked (TVL), also topped the mover’s list, though their rallies didn’t necessarily point to any strong developments in the wider DeFi space.
Popular decentralised exchange dYdX, for instance, fell more than 15% while TVL across all DeFi protocols fell 4% to US$48.45bn overnight.
Conflux (CFX), Frax Share (FXS) and SingularityNET (AGIX) were also among the top fallers.
Global cryptocurrency market capitalisation fell 4% overnight, but has managed to stay just above the US$1tn barrier for now.