Silvergate Collapse Sends Bitcoin Tumbling: What’s Next?

Key Points:

• Bitcoin has experienced a sudden dip in its price, falling below the $20,000 mark for the first time in nearly two months. The dip occurred after the collapse of Silvergate, a prominent “crypto-bank”, and the latest budget announcement from United States President Joe Biden.
• Silvergate Bank, a major United States bank that services crypto firms, recently announced that it was entering voluntary liquidation on March 8.
• United States crypto miners could potentially face a 30% tax on electricity costs under a Biden budget proposal.

Bitcoin has experienced a sudden dip in its price, falling below the $20,000 mark for the first time in nearly two months. The dip occurred after the collapse of Silvergate, a prominent “crypto-bank”, and the latest budget announcement from United States President Joe Biden.

According to CoinMarketCap data, BTC’s price briefly slipped to $20,081 on March 10 before recovering to hover just above $20,000. The price of Bitcoin had been performing well at the beginning of 2023, but it fell by 5% in just one hour on March 3, following the news of Silvergate’s uncertain future. Despite some recovery, the price has not managed to lift significantly since then.

Silvergate Bank, a major United States bank that services crypto firms, recently announced that it was entering voluntary liquidation on March 8. This development has emerged as a possible strong headwind for the crypto industry, contributing to the uncertainty that has affected Bitcoin’s price.

In addition, on March 9, a supplementary budget explainer paper revealed that United States crypto miners could potentially face a 30% tax on electricity costs under a Biden budget proposal. The proposal aims to “reduce mining activity,” which could have a significant impact on the cryptocurrency industry and could also contribute to the downward pressure on Bitcoin’s price.

The combination of these two events has led to some concerns about the future of Bitcoin and the wider cryptocurrency market. However, it is worth noting that the cryptocurrency market has been highly volatile in recent years, and it is not uncommon for prices to fluctuate rapidly.

Despite the recent dip in Bitcoin’s price, there are still many factors that could potentially drive up the cryptocurrency’s value in the future. For example, there is growing interest in cryptocurrency from institutional investors and mainstream financial institutions, and there are ongoing efforts to improve the scalability and functionality of blockchain technology.

It remains to be seen how these factors will ultimately impact the value of Bitcoin and other cryptocurrencies, but it is clear that the crypto industry is likely to continue to be subject to volatility and uncertainty in the coming months. Investors and analysts will need to carefully monitor developments in the sector to make informed decisions about investing in cryptocurrency.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

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