Bitcoin Market Sees Significant Losses After U.S. Jobs Report
The cryptocurrency market was hit hard on Friday after investors sold stocks, especially shares of banks and other risky assets, ahead of the U.S. jobs report. Bitcoin lost 9% over the last 24 hours, dropping below $20,000 — a level it hasn’t fallen below since the top of 2023. On Thursday, $250 million in long positions in bitcoin were liquidated, according to Liquidation Data from Coinglass.
The wider crypto market also fell on Friday, after a week of interest-rate fears, the collapse of crypto-focused Silvergate Capital, and U.S. authorities transferring $1 billion worth of bitcoin recovered from a dark web hack to new wallet addresses, including one owned by Coinbase, which may cause a drop in the prices across the market. Let’s examine what caused this significant drop in bitcoin prices as of late.
Fears Over Interest Rates
One of the main factors driving the lower cryptocurrency market is concern about rising interest rates. As yields rise, investors become more likely to move their funds out of riskier assets like cryptocurrencies and into safer investments that offer higher returns. President Biden’s soak-the-rich recent policy isn’t making things any easier by laying out an array of tax hikes. This has been exacerbated by recent news that U.S. Treasury yields are at their highest levels since 2014 — prompting investors to sell off stocks and other risky assets in favor of bonds with higher yields.
The collapse of Crypto-Focused Silvergate Capital
On Friday, the collapse of crypto-focused Silvergate Capital was another major factor driving losses in the cryptocurrency market. Silvergate has been providing banking services to many major cryptocurrency exchanges and businesses since 2018 but recently announced that its operations would be winding down due to financial difficulties caused by the pandemic and increased regulatory scrutiny from federal regulators.
This news might have spooked some investors holding large amounts of cryptocurrency within Silvergate’s banking system — leading them to sell off their holdings in fear that they could lose access to their funds if Silvergate went completely insolvent.
Overall, it is clear that many factors drive losses in the cryptocurrency market on Friday — including fears about rising interest rates and news about the collapse of crypto-focused Silvergate. It remains to be seen whether these losses will continue or if cryptocurrencies can recover in the coming days and weeks — but it is clear that there is still a lot of uncertainty surrounding the future growth prospects for digital currency markets worldwide. Bitcoin is currently at $20,077 at the time of writing. The mantra at Black Bitcoin Billionaire is still investors should continue to monitor developments closely before making any decisions about investing or selling off their holdings in cryptocurrencies moving forward.