Today’s crypto market is in the red. On Friday, the digital asset market experienced a broad sell-off as investors became concerned about the future of crypto-friendly banks based in the United States. The total crypto market cap has dropped by 7% in the last 24 hours, losing more than $60 billion. It is now worth $930 billion.
Crypto markets welcome back the winter
Following US President Joe Biden’s latest budget and the collapse of “crypto-bank” Silvergate, Bitcoin fell below $20,000 for the first time in nearly two months. According to CoinMarketCap data, the price of Bitcoin fell to $19,945 on March 10 before recovering to hover just above $20,000 today.
Bitcoin had a stellar start to 2023 but fell as much as 5% in an hour on March 3 due to Silvergate uncertainty. Since then, the price does not appear to have been able to rise. Ethereum is down by the same amount this period and currently trades at $1,421 per coin.
According to Coinglass data, $308 million was liquidated from the DeFi market in the last 24 hours. The Bitmex exchange received the single largest liquidation order of $9.49 million. Binance, on the other hand, reported a $106 million liquidation on the previous day.
At the same time, the OKX exchange followed the world’s largest exchange, reporting a $74 million liquidation. According to data, Bitcoin, the world’s largest coin, lost $120 million in the last 24 hours. ETH saw a $75 million liquidation during the same period.
Reasons the crypto market is crashing
According to reports, the market cap of United States stocks and digital assets has decreased by approximately $2 trillion in the last 24 hours. Silicon Valley Bank was unable to reassure its clients that their funds were secure following a massive 60% decline in its stock price.
This resulted in a massive sell-off on both trading markets, with stock market futures falling to a two-month low and Bitcoin falling below the critical $20,000 threshold. However, the failure of SVB would be the second largest in U.S. history. This could be a significant red flag for the financial markets.
In the same week, two major American banks failed. Following a customer exodus, crypto bank Silvergate went into voluntary liquidation earlier this week. Only a few days later, on March 9, Silicon Valley Bank (SVB) stock plummeted after the company announced a $1.75 billion share sale to shore up its balance sheet. Some market analysts undoubtedly foresee a digital asset doom and call on traders to quit the industry.
In a bleak economy still reeling from prolonged lockdowns and a year-long war in Ukraine, all eyes are once again on banks. BitMEX co-founder Arthur Hayes asserted on March 10 that Federal Reserve Chair Jerome Powell “might have broken the US banking system.”
Second, New York Attorney General Letitia James filed a lawsuit against crypto exchange KuCoin on Thursday for allegedly selling unregistered securities in violation of the law.
This lawsuit has implications for the entire digital asset market, as it could alter how regulators view traditionally commodity-like cryptocurrencies such as Ether. James wants to prohibit the exchange from conducting business in New York.
Third, President Biden’s proposed budget includes a 30% tax on the electricity used to mine cryptocurrencies. Officials at the White House assert that the energy-intensive practice impedes the transition to a low-emission energy future.
The recent decline in U.S. stocks, especially in the financial sector, has harmed investor sentiment. The Dow Jones Industrial Average dropped more than 500 points on Thursday. Other major indexes are also poised for substantial weekly losses.
In other news, the Biden Administration proposes closing a tax loophole to raise $24 billion for the US government. The loophole enables investors to harvest their cryptocurrency losses in order to offset capital gains and income for individuals.
In addition, concerns regarding rising interest rates persist following the hawkish comments of Federal Reserve Chairman Jerome Powell. Friday will bring an important report on payrolls, which could influence the direction of interest rates.
Cardano crypto prices fell by 3.57% today. XRP is down by 4.04%. The price of Solana fell by 7.63%. The price of polygons has fallen by 4.08%. Polkadot prices have dropped by 3.80%. Huobi Token is down 21.21%.
Meme cryptos have also experienced a significant drop in the last 24 hours. Dogecoin‘s price is down 8.24%, while Shiba Inu’s price is down 9.18%.