The cryptocurrency industry suffered a string of failures last year, when many internal companies and projects collapsed, leading to price drops, numerous bankruptcy filings, and, as expected, massive investor losses.
After a positive start to the year, cryptocurrencies have once again been hit hard this time, most notably by outside players. All of this has hurt the performance of Bitcoin and most altcoins, leading to yet another shift in overall sentiment.
BTC finally broke above $17,000 in the first few weeks of 2023, fueling a small bull run that took the asset to and above $25,000 in February. The popular fear and greed index surged from the depths of "fear" and "extreme fear" to greed after gaining nearly 50% in that time frame and hitting multi-month highs.
However, while many industry experts believe that the bear market is finally over and that BTC may be heading back to new highs, Bitcoin cannot double down on its positive run. Quite the contrary, the asset stalled before falling back to around $22,000. The price fell further, with possible reasons including the U.S. government’s alleged sale of bitcoin seized from Silkroad on Coinbase and even further interest rate hikes. Then some unexpected problems arose. Silicon Valley Bank a large commercial bank, or the one Bitcoin was created to combat collapsed on Friday after failing to raise additional capital.
At first one might think that this is actually good for major cryptocurrencies, as it shows that even giants from the traditional financial world can collapse as easily and violently as the Terra ecosystem. After all, Bitcoin emerged as an alternative following the largest banking collapse in U.S. history. SVB became the second largest such explosion.
However, it turns out that some cryptocurrency companies had exposure to the failed bank. One of those names is Circle the industry giant behind the second-largest stablecoin USDC. The native stablecoin lost dollar parity and plummeted below $0.9 following news that the firm held at least $3.3 billion in SVB.
All of this has affected the price of Bitcoin, which fell all the way to $19,500 yesterday. This is the lowest point in two months. Naturally, the overall sentiment shifted again, as evidenced by the Fear and Greed Index. The indicator, which takes into account different factors such as volatility, social media comments, surveys, etc., dropped to 33 - a state of fear. FYI, February was above 55, showing a greedy sentiment, and last week was around 50 - neutral.
