21. February 2024

• Bitcoin (BTC) fell to its lowest since mid-January on March 10.
• The majority of the losses occurred during Wall Street trading as risk assets everywhere suffered setbacks due to major restructuring at Silicon Valley Bank (SVB).
• SVB parent company, SVB Financial, said that it was selling its entire securities portfolio and attributed this to the Federal Reserve’s policy of quantitative tightening (QT).

Bitcoin Price Falls Below $20,000

Bitcoin (BTC) price action has fallen below $20,000 for the first time in two months on March 10. Data from Cointelegraph Markets Pro and TradingView shows BTC/USD 1-day candle chart (Bitstamp).

Silicon Valley Bank Gets Its ‘Silvergate Moment’

The majority of Bitcoin’s losses occurred during previous day’s Wall Street trading as risk assets everywhere suffered setbacks due to major restructuring at Silicon Valley Bank (SVB)— the United States’ 16th largest commercial lender. SVB parent company, SVB Financial, said that it was selling its entire securities portfolio at a major loss as part of a plan to raise over $2.2 billion in capital. This caused a collapse in SVB Financial’s share price which shed 60% during the session.

Quantitative Tightening Affects Risk Assets Across The Board

This move is all too familiar for crypto market participants who remember the recent demise of Silvergate bank and instead of blaming FTX debacle for these troubles, SVB attributes them to Federal Reserve’s policy of quantitative tightening (QT) — a process of removing liquidity from the economy which has pressured risk assets across the board.

Reactions From Crypto Market Participants

Crypto market participants reacted negatively to news with stocks reeling from the news and it being only a matter of time before crypto caught the contagion. Arthur Hayes tweeted “JAYPOW might have broken US banking system” while Michaël van de Poppe shared his opinion stating “The economy is not looking great yet Powell wants to continue and accelerate hikes.”

Conclusion

The selloff resulted in Bitcoin falling below $20K again after 2 months amidst Wall Street chaos caused by structural changes within one of USA’s biggest banks – Silicon Valley Bank – heavily attributing this fall to Federal Reserve’s policy of quantitative tightening leading many crypto market participants sharing their views about US banking system being potentially broken by JAYPOW Powell and his policies around continued interest rate hikes despite an already faltering economy