Bitcoin falls to $20,000, leads drop in crypto prices as JPMorgan remains negative on crypto

www.theblock.co

10 March 2023 20:51, UTC

Reading time: ~3 m

Crypto prices continued to trade down driven lower by the latest U.S. banking casualties and worsening market sentiment.

Bitcoin was trading around $19,990, down 5% in the past 24 hours, according to TradingView data. The leading cryptocurrency by market cap and many of its peers experienced the worst week in trading since the collapse of FTX in November. Ether slid 6% to around $1,400.

BTCUSD chart by TradingView

Altcoins fell across the board. Binance’s BNB slipped 2.8%, and Ripple’s XRP dropped 4.7%. Dogecoin was down 6.3%, and shiba inu fell 4.5%.

Crypto stocks also were mostly down. Coinbase dropped 9.9% to about $52, MicroStrategy fell 9.3% to $191.40, and Block dropped 4.1% to just below $71.

Macroeconomic conditions have weighed heavily on markets this week. Fed Chair Jerome Powell said interest rates could go higher than originally expected earlier in the week, adding the central bank was “prepared to increase the pace of rate hikes.”

With this in mind, U.S. jobs data for February became even more significant — the Fed noted a softening of the labor market might be required to stem inflation.

Non-farm payroll growth came in hotter than expected on the top line number, 311,000 versus estimates of 225,000. The sting was taken out by wage growth coming in below expectations and the jobless rate increasing by 0.2%, Trakx’s Ryan Shea, a crypto economist, told The Block.

“Overall, it was a bit of a “something for everyone” report, with the hawks being able to point to strong employment and the doves to the uptick in the jobless rate and easing wage growth,” he said. Today’s report is unlikely to provide much clarity, Shea said, noting that attention will shift to next Tuesday’s inflation U.S. data.

“That said, given the surfacing of worries about the health of some parts of the U.S. TradFi banking sector, the macro news could easily become overshadowed by market events,” he said.

‘We remain negative on digital assets’

Following the latest setback for the crypto ecosystem, JPMorgan analysts remain negative on the space. Silvergate Bank, the bank of choice for many crypto firms in the U.S., is set to wind down, and this could leave firms scrambling to find suitable banking partners.

“The negative news from Silvergate’s collapse dented crypto investors’ sentiment with our crypto positioning indicators based on CME bitcoin and ethereum futures shifting to the very oversold levels of the end of last year, effectively reversing the previous positive year-to-date impulse,” analysts at the bank wrote in a note.

“Looking at the shape of the futures curve, the reversal in the bitcoin and ethereum futures spread over spot is also indicative of a deterioration in demand,” they said.

The “size of the stablecoin universe and the pace of crypto VC funding” must improve before this outlook changes, the analysts said.

Banking woes worsened today as Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corporation was appointed as the receiver. All depositors may be made whole, TD Cowen’s Jaret Seiberg wrote in a note, “as the FDIC said assets exceed liabilities by about $35 billion.”

“We do not see this as the start of a broader threat to the safety and soundness of the banking system,” Seiberg noted.

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