The Bitcoin Rally Of Early 2023 Could Be Nothing More Than A Blip In A Bear Market

As traders struggled to recover from the collapse of the digital asset-focused bank Silvergate Capital and remained wary of macroeconomic pressures ahead of Friday's crucial U.S. employment data, bitcoin and other cryptocurrencies fell on Thursday.

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In the past 24 hours, Bitcoin's value has decreased 2% to $21,650, widening losses from recent days and recouping gains from the most significant cryptocurrency's early 2023 spike, which sparked predictions of a new bull market. Although Bitcoin has increased by over 30% over the past year, February's six-month highs above $25,000 increasingly seem out of reach.

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"The total market capitalization of the crypto market is back under $1 trillion... nearing the February lows and the critical sign level of $21,500," said Alex Kuptsikevich, an analyst at dealer FxPro.

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"A break below this level would shift the current situation from a 'normal correction' to a'methodical selloff.' In that scenario, the road to $18,000 for Bitcoin is open," Kuptsikevich continued. "The rebound since the beginning of the year appears to be a blip in a bear market, not the commencement of a protracted upswing."

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Cryptos are being snatched from both sides, with fissures in the business—notably, news that Silvergate (ticker: SI) subsidiary Silvergate Financial institution is liquidating and shutting down, causing ripple effects as well as heightened volatility—adding to broader, macro-led pressures.

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Intellectual property and shares have fallen in recent days over concerns about rising interest rates, with the Dow Jones Industrial Average and S&P 500 lost ground before of Friday's roles report, a critical driver.

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"Bitcoin is still bouncing at a three-week low as Wall Street tries to figure out what the Fed's rate hike campaign will do to the economy," said Edward Moya, an analyst at trader Oanda. "There are no compelling reasons to buy this drop based on the facts available in the cryptoverse."

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After Bitcoin, Ether, the second-largest cryptocurrency, fell more than 1.5% to below $1,550. Lesser cryptos or altcoins have fallen even deeper into the red, with Cardano falling 3% and Polygon falling 8%. Memecoins were not spared, with Dogecoin down 3%, but Shiba Inu — which saw a brief rise last week — fell less than 1%.