Bitcoin crashed below that and breached $20,000

Bitcoin plunged below $20,000 on Friday, with a drop of more than 8% in the past 24 hours, along with a general sell-off in risky assets and continued distrust in the sector, following the recent fall of Silvergate Bank.

The world’s most used cryptocurrency was trading around $19,900, breaking the $20,000 barrier for the first time since January and accumulating a loss of nearly 11% in the past seven days, according to Coinmarketcap.

This decline is part of a general collapse among all cryptocurrencies as more than $70,000 million in market capitalization has been lost in the past 24 hours.Ethereum is down 8.85%, while other altcoins such as dogecoin are down as much as 10%.

In the case of bitcoin, this Friday’s fall caps the worst week since last November, with its value in that time down 23%. After a “crack” occurred in the market due to the fall of the FTX trading platform, one of the most important until then besides Binance.

After that fall, bitcoin began a revaluation process at the beginning of the year, going from its value of $16,500 to $25,000 in mid-February.

Various reasons led to Friday’s collapse, both on the macroeconomic front and the private sector. On the other hand, cryptocurrencies – like other risk assets such as stock shares – do not escape concerns about the monetary policy that the Federal Reserve (FED) will adopt.

Although at the beginning of the year the Fed was unlikely to end this month raising interest rates – which began a year ago – and leaving them in a range of 4.75% to 5%, recent economic data points to that inflation. The pressure has not subsided.

This may force the Fed to continue raising interest rates for a longer period, benefiting assets such as Treasurys at the expense of others such as stocks and cryptocurrencies.

“Selling cryptocurrencies seems mostly related to the context of risky assets.”John Toro, director of exchanges at Independent Reserve Platform, told Bloomberg News.

For his part, market analyst Tony Sycamore of IG Australia noted that bitcoin is likely to remain in the $15,500-$25,000 range. “Risk sentiment has deteriorated this week. (Fed Chair Jerome) Powell has been tougher than markets expected.”.

“The data we’ve seen so far this year suggests that the final price level should be higher,” Powell said this week during an appearance on Capitol Hill.

But cryptocurrencies are also facing increased scrutiny from regulatory authorities.. A New York state regulator on Thursday sued KuCoin, a cryptocurrency platform, citing Ethereum as financial collateral in the process.

This position is shared by the Securities and Exchange Commission (SEC): deeming cryptocurrencies “securities” would equate them — in regulatory terms — to other traditional assets such as bonds and stocks.

The loss of reputation and trust in cryptocurrencies doesn’t help either. US bank Slivergate, known for its links to the cryptocurrency sector, announced its liquidation yesterday, a new victim of the domino effect of the FTX bankruptcy last November. The entity experienced a huge wave after learning that the platform was one of its main clients.

Although not strictly related to cryptocurrency, the run reported last night by Silicon Valley Bank (SVB) added another element of fear in the markets.

“Crypto-specific issues coupled with weakness in asset markets is the perfect recipe for volatility,” said Edmund Goh of B2C2.