Bitcoin’s price may have peaked. Support for a bumpy ride.

The price of Bitcoin has been flat over the past 24 hours at around $22,375. While the rally to start the year means the largest digital asset is still up by about a third in 2023, Bitcoin has left behind its most recent peak above $25,000. Heavy selling last week also put the $23,000 to $24,000 range — which had dominated much of February — well behind, wiping out bullish traders who were betting on Bitcoin’s rebound to another bull market after a brutal 2022.

To blame for the latest leg of the downward spiral has been the distress of an influential bank, Silvergate (ticker: SI), which has played a key role in connecting institutional crypto market players and facilitating liquidity.

Silvergate revealed last week that it was facing a financial crisis, posting dramatic losses as it was forced to sell assets at deep discounts to stay liquid during a bank run. The possible collapse of Silvergate – the bank said it was evaluating its ability to continue as a going concern – has hit crypto prices, affected market liquidity and raised the prospect of a regulatory breach.

“Bitcoin has been consolidating since Friday’s sell-off with traders apparently fearful of further spillovers but still willing to hold on for now just in case,” said Craig Erlam, analyst at broker Oanda. “Events late last week were a quick reminder of the challenges facing the industry in the short term and the consequences of that.”

From a technical perspective, recent crypto market dynamics suggest that the best may be over for Bitcoin for now and that it could be a bumpy ride ahead.

A troubling sign came when Bitcoin and Ether – by far the two biggest digital assets – fell on Friday by much more percentage than other cryptos. This “has historically only happened at local peaks in prices,” analysts at crypto exchange Bitfinex wrote in a note. The analysts added that realized and implied volatility indicators have both increased over the past 10 days, and given these are lagging signals, it likely means prices are poised to see more volatility in the near term.

“The overall picture is one of heightened volatility, along with short-term tight ranges where price may ping-pong aggressively between levels, at least for the coming week,” the Bitfinex analysts said. “On the higher time frame, anticipation of a drop like this has historically signaled that a short-term top may already be in or about to form for Bitcoin.”

Some of this volatility is likely to come as a reaction to macroeconomic news in the coming week. Cryptos remain correlated with equities – thanks to a tough macro backdrop of high inflation and rising interest rates – and are poised to trade in tandem with

Dow Jones Industrial Average

and

S&P 500.

Investors are looking at congressional testimony this week from Federal Reserve Chairman Jerome Powell, Friday’s US jobs report and next Tuesday’s consumer price index inflation data as key catalysts to come.

Beyond Bitcoin, – the second largest crypto commodity – was just above flat at around $1,560. Smaller cryptos or altcoins were more mixed, too

Cardano

1% lower and

Polygon

bounced 3% higher. Memecoins were more muted, with both

Dogecoin

and

Shiba Inu

less than 1% in the green.

Write to Jack Denton at [email protected]