Looking Through the Bitcoin Price Rollercoaster
Last two weeks were unlike any other in the crypto world. First, we saw the dramatic fall of the Silvergate bank, then came the USDC depeg, kick-started by a sudden closure of SVB. During the last weekend, all eyes of the crypto community were peeled to the Bitcoin price ticker as it ping-ponged and reacted to the latest news. Then came Monday, the 13th of March, bringing a bull run we’ve not seen in a while. And with this, it felt only natural for us to stop for a breather, and investigate the BTC price movements of the last few days.
Let’s delve in and figure out what is happening with the crypto markets right now. It has been a crazy few days, and just maybe, these recent events are starting to be advantageous for Bitcoin as an asset class. The question is, will it finally depeg from the general world news?
A jump to last week
The second week of March 2023 brought nothing but fear to the markets with Bitcoin's price at $22,000. A big decline started late on Thursday, just a few hours after major cryptocurrency market players, including Coinbase, Galaxy Digital, Circle, Paxos, and Bitstamp, announced that they had stopped accepting or initiating payments through Silvergate Bank.
It was announced on Wednesday that Silvergate, which has become the go-to bank for cryptocurrency businesses, will not meet an extended deadline to file its annual report and that the company has issued a warning that it may not be able to operate for the next calendar year as a result of exposure to FTX.
Following a slowdown in FTX-related instability, cryptocurrency markets experienced a solid recovery to six-month highs, only to plummet on the Silvergate news and concerns regarding liquidity and risk.
Analysts saw the current position of the market as very volatile. Even though we are no longer in the depths of crypto winter, analysts outlined that the market needs to decide how much it will continue to price in Silvergate's crypto failure while simultaneously taking into consideration positive economic news from China.
“It does not appear that the Silvergate issue is causing the widespread outbreaks. And most of the price decline connected with this news may have already occurred," Matt Weller, the global head of research at a Foreign currency exchange platform, said in an interview with CoinDesk TV on Friday. "It wouldn't surprise me to see Bitcoin retrace back down to $20,000, or maybe even $18,000, to sort of retest those lows," the analyst said. "That wouldn't be surprising. But...it would appear that the worst of the winter is behind us at this point.”
March Zheng, the co-founder and managing partner of Bizantine Capital, mentioned in a letter to CoinDesk that "China's opening is a positive factor for the world's economy, which infers that certain animal spirits are back in Asia."
Zheng suggests that the so-called animal spirits may bring an increase in people's interest in assets such as Bitcoin. He made the following statement: "We are of the view that it will combat the ongoing, persistent worries in the U.S. stocks markets as well as growth rates." "It is our opinion that it will act as a counterweight to the ongoing anxieties that people in the United States have.
The now and the future
As we saw, Bitcoin and other cryptocurrencies are subject to significant price swings. The changes in the price of Bitcoin at the beginning of 2023 have led cryptocurrency analysts to forecast that the average BTC rate will be $23,524 by the end of March 2023. It was anticipated that the lowest possible price will be $21,283, and the highest possible price will be $24,196.
These predictions held true until Monday the 13th, of course. At the time of writing, BTC's price is trading at over $24,000 on Gate.io, among other crypto exchange platforms. Based on its current price, it appears that BTC has the potential to continue growing in value.
First, we witnessed the USDC depeg, caused by the failure of the Silicon Valley Bank. It turned out that a good share of fiat that backed the stablecoin was held at this bank and this is when all hell broke loose. See, stablecoins are considered to be the mainstay of safety when investors exit crypto, and when stablecoins fault, it may seem that there is nowhere to go.
And then came Bitcoin. In the fast paced world of crypto, it is easy to forget that some cryptocurrencies can and should be used as stores of value. For example, Bitcoin is often compared to gold, assuming that when the market is in black swan mode, it is an asset that people should flock to. Ethereum on the other hand can be used as a yield-generating currency. One that delivers returns when staked, and has clear reasoning behind how and why this yield is generated. The same cannot be said about the banks, so maybe it is time to go about crypto more seriously?
Finally, the blockchain market continues to expand at a very consistent rate. As a result of this ongoing expansion, many believe that 2023 will be a good year for cryptocurrency since more people will gain greater faith in underlying technology and more companies will choose to implement it. As more businesses begin to utilize blockchain technology, there will be an increased demand for qualified professionals, and as the industry grows, so should the value of its assets.