On Monday, the price of Bitcoin was just around $22k. Fast forward to this morning; it was trading at $19k. At the time of writing, BTC was trading at $20,130.
The price drop to $19k seems to have shut down the projections that crypto is entering a new bull market cycle. The projection was supported mainly by February's six-month price highs above $25,000, but the gains seem to have disappeared again. However, two events have mainly influenced the current fall of BTC's price:
Proposed 30% tax on BTC mining
On Thursday, March 9, the United States Treasury Department announced a proposed 30% tax on the electricity used for mining Bitcoin. The proposal is meant to "reduce mining activity", and any BTC mining firm would be "subject to an excise tax equal to 30% of the electricity costs used in digital asset mining."
Silvergate Bank Liquidation
Silvergate Bank, a major crypto bank, announced on Wednesday, March 8, that they would cut down operations and liquidate the bank. Silvergate Capital Corporation said the decision to wind down operations was "in light of recent industry and regulatory developments." According to the corporation, the Bank liquidation plan included "full repayment of all deposits".
BTC/USD pairs have also crashed in price due to a major restructuring at Silicon Valley Bank (SVB), the 16th largest commercial lender in the United States. SVB Financial, the parent company, has announced plans to raise over $2.2 billion in capital by selling its entire securities portfolio.
As a result, SVB Financial's share price went down by 60%. SVB Financial attributed its troubles to the Federal Reserve's policy of quantitative tightening (QT), which has placed negative pressure on risk assets like cryptocurrencies, real estate and equities across various markets.
In a letter to investors, CEO and president Greg Becker wrote, "We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients as they invest in their businesses."
Should you buy the dip?
While some traders are still calculating their losses, based on their decision to either hold steady through the market turbulence or not, others see this as a prime opportunity to accumulate more bitcoin. After all, Bitcoin has been the top-performing asset worldwide for three consecutive years.
Buying the dip is a decision you should take after evaluating the market and your portfolio. If you decide to buy the dip, we have a guide for you here.
Disclaimer: This article was written by the writer to provide guidance and understanding of cryptocurrency trading. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.