The price of bitcoin (BTC) has fallen below the $20,000 level for the first time since mid-January, as a wave of bearish news has overwhelmed the crypto’s strong 2023 uptrend.
The largest cryptocurrency by market cap quickly regained some of its lost ground late Thursday (ET) and was recently hovering around $20,040, down 7.7% over the past 24 hours.
After reaching an all-time high above $69,000 in November 2021, bitcoin tumbled late that year and throughout 2022 to begin 2023 at around $16,600. A strong rally into mid-February had bitcoin ahead more than 50% for the year at one point to $25,000.
Events since, however, have given ample reason for sellers to emerge. Among them was a stronger-than-expected inflation report that cast doubt on the US central bank’s assertion in early 2023 that a disinflationary trend had begun. The Federal Reserve itself has acknowledged this, with its chairman Jerome Powell telling Congress earlier this week that the central bank has far more work to do to bring inflation back to its 2% target.
In addition to interest rate fears, there was the collapse of crypto-friendly lender Silvergate Bank on Wednesday evening. Also on Wednesday, the US Justice Department moved 49,000 seized bitcoins from darknet marketplace Silk Road to new addresses, suggesting the government may be interested in selling the large stockpile soon.
“Silvergate is one of several factors in Bitcoin’s downside test,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote in an email to Coindesk. “In addition to Silvergate, there is market concern about larger rate hikes by the FOMC and softer stock market prices. The SEC is also showing increasing scrutiny of crypto. Overall, the market has continued to tighten and retest support levels.”
DiPasquale added: “As we have stated since January, we think it will test its support below $20K before moving up again. We see $18k as the next major support level.”
James Rubin contributed reporting to this story.
UPDATE (March 9, 2023, 1:10 UTC): Adds the latest bitcoin pricing.