The cryptocurrency industry experienced its own set of failures last year when numerous companies and internal projects imploded, leading to falling prices, countless bankruptcy filings and, somewhat expectedly, many losses of investors.
This year has started on a high note, but crypto has once again taken a serious hit – this time with the most apparent reason coming from outside players.
All of this hurt the performance of bitcoin and most altcoins, leading to another change in general sentiment.
BTC shut down due to banking issues
In the first few weeks of 2023, BTC eventually broke above $17,000, which sparked a mini bull run that took the asset to $25,000 and beyond in February. After adding nearly 50% over this period and hitting a multi-month high, the popular fear and greed index has skyrocketed from deep ‘fear’ and ‘extreme fear’ to greed. .
Still, bitcoin was unable to double its positive run, even though many industry experts suggested that the bear market was finally over and BTC could return to new highs. On the contrary, the asset stalled before falling back down to around $22,000.
Further price declines have occurred, with possible reasons ranging from the US government’s alleged sale of BTC seized from Silkroad on Coinbase to even larger interest rate hikes. Then came less expected problems. Silicon Valley Bank – a large commercial bank, or what bitcoin was created to fight against, collapsed Friday after failing to raise additional capital.
You would think at first that this would actually be beneficial for the mainstream cryptocurrency as it shows that even giants of the traditional financial world could implode as easily and violently as something like the Terra ecosystem. After all, BTC emerged after the biggest US banking meltdown in history to be something of an alternative. And SVB became the second strongest such explosion.
However, it turned out that some crypto companies had exposure to the failing bank. One such name is Circle – the industry giant behind the second largest stablecoin – USDC. As news emerged that the company held at least $3.3 billion in SVB, the native stablecoin lost its dollar parity and dropped to and below $0.9.
back to fear
All of this affected the price of bitcoin, and it fell as low as $19,500 yesterday. It became its lowest position in two months. Naturally, the general sentiment changed again, highlighted by the fear and greed index.
The metric, which takes into consideration different factors, such as volatility, social media comments, polls, etc., fell to 33 – a state of fear. Just for reference, it was above 55 in February, showing greedy sentiment, and was around 50 last week – neutrality.
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