First Mover Asia: Bitcoin Plunges to Mid-January Levels

Good morning.

Here’s what’s happening:

Prices: Bitcoin's fall below below $20K took the largest crypto by market cap to mid January levels.Insights: Silvergate Bank's implosion and other events have shaken crypto markets, but investors of futures contracts still seem largely optimistic.Prices

Bitcoin's Return to January Days

Bitcoin returned to January levels on Thursday, plunging below $20,000.

The largest cryptocurrency by market capitalization was recently trading at $20,067, down 7.7% over the past 24 hours as nervous investors stewed over ongoing inflationary pressure, fallout from the implosion of crypto-friendly Silvergate Bank, and most recently, a New York state lawsuit that alleges ether and other cryptos are securities. BTC has now erased about half its gains from a vibrant first six weeks of the year when hopeful investors sent the crypto up about 40% and past $25,000 in mid February.

"There's a lot of people that are scared that maybe the domino effect is just starting," Eddy Gifford, a wealth advisor for investment advisor Tactive. There's FTX, now Silvergate, who's next? We also had news out of the Fed where (Fed Chair Jerome) Powell was very hawkish on raising interest rates likely higher than anyone wanted to even expect – and potentially keeping those rates higher for longer. In those situations, risk assets in general tend to decline, because valuations are a function of the ability to meet estimates and interest rate environment."

He added: "So if the interest rate environment remains elevated for longer, that's going to push prices down."

Ether roughly matched bitcoin's plunge to change hands at about $1,430, its lowest level since mid January. Other major cryptocurrencies were firmly in the red with CRO, the token of exchange Crypto.com off 7.6% and popular meme coins DOGE and SHIB both dropping more than 8%. The CoinDesk Market Index, a measure of the broader crypto market's performance, was down 7.5%.

The sour mood in crypto markets also manifested itself in crypto traders' some $307 million in liquidations over the past 24 hours, according to Coinglass data. Bitcoin (BTC) traders suffered the most losses, some $112 million, while ether (ETH) liquidations surpassed $73 million. Of the liquidated trading positions, some $282 million were longs, betting on higher prices.

Meanwhile, equity markets stumbled amid a massive sell-off of bank stocks that sent JPMorgan Chase and Bank of America down more than 5% and 6%, respectively The tech-focused Nasdaq tumbled 2.1%, while the S&P 500 and Dow Jones Industrial Average (DJIA) fell 1.8% and 1.7%, respectively. The downturn came even as jobless claims ticked up slightly, a mildly encouraging sign given the tight job market that has pressured prices upward.

Tactive's Gifford said that if bitcoin breaks with $20,000, "we could get the $15,000 pretty fast," and if we break through $15,000, we go to $10,(000) fast. But he noted bitcoin's staying power and halving next year. "That typically has been a spark for bull markets in bitcoin," he said.

He added: "We'll see a few more companies fall, but that's just going to make the ones that are left on the back end that much stronger. And I think that builds a case for we start actually seeing some more widespread adoption of digital assets in general."