The decision by the two federally insured members of the Federal Reserve System, Silicon Valley Bank, and Silvergate Bank, to shut down operations in a span of a week has had an immediate effect on Bitcoin. The digital asset dropped below $20,000 for the first time since January this year. While analysts already expected such a retest due to other market indicators like the RSI dropping to a level not seen since November 2022, it is still difficult to predict how long this bearish trend will last or if there will be any recovery before further losses are incurred.
It is worth noting that Bitcoin seemed to have recovered quickly and regained its lost support at the 100-day SMA at $20308, which coincides with the 23.6% Fibonacci retracement level, as well as the 200-day SMA sitting at the 19500 USD mark, but whether these levels can hold up against further selling pressure remains uncertain right now given current market conditions where stability seems far off in sight.
Therefore, investors should take appropriate precautionary measures before investing their money into crypto markets, including diversifying their portfolio across different asset classes, so that they don’t suffer from huge losses when prices drop drastically due to unexpected events like what we saw recently with Silicon Valley Bank and Silvergate Bank shutdowns affecting BTC price significantly within a short period of time.
