ETH and BTC Tumble on Fears of a Silvergate Bank Friday Collapse

Key Insights:

• On Thursday, bitcoin (BTC) and ethereum (ETH) joined the broader market in negative territory, with BTC falling short of the $24,000 handle.
• Regulator chatter, US lawmaker scrutiny, and Silvergate Bank news sent the crypto market into negative territory.
• Selling pressure intensified this morning, with BTC visiting sub-$22,000.

Ethereum (ETH) fell by 1.02% on Thursday. Partially reversing a 3.74% rally from Wednesday, ETH ended the day at $1,648.

A bullish start to the day saw ETH rise to an early morning high of $1,678 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $1,692, ETH slid to an early afternoon low of $1,619. Finding support at the First Major Support Level (S1) at $1,617, ETH revisited the $1,650 handle before easing back.

On Thursday, bitcoin (BTC) declined by 0.99%. Partially reversing a 2.44% rally from Wednesday, BTC ended the day at $23,472. The bearish session left BTC at sub-$24,000 for the fifth time in six sessions.

A bullish start to the day saw BTC rise to an early high of $23,800. Coming up short of the First Major Resistance Level (R1) at $24,132, BTC fell to an early afternoon low of $23,205. However, steering clear of the First Major Support Level (S1) at $23,159, BTC revisited the $23,500 handle before easing back.

Silvergate Bank News and SEC and US Lawmaker Chatter Sink the Market

Ethereum Shanghai upgrade news and ETH staking inflow numbers took a back seat on Thursday.

SEC chatter and crypto scrutiny from Capitol Hill weighed on investor appetite, with dovish Fed commentary unable to offset the effects of positive US labor market stats.

SEC Chair Gary Gensler was in the spotlight, with comments from an SEC Investor Advisory Committee Meeting garnering investor attention. The SEC Chair took the opportunity to take a swipe at crypto platforms, talking about custody issues, the comingling of customer funds, and customer losses from bankruptcies.

US lawmakers added to the bearish mood. A bipartisan letter to Binance drew plenty of interest.

Addressed to Binance CEO CZ, US Senators called on Binance to share ‘information regarding growing concerns over the finances, risk management, and regulatory compliance of Binance, Binance.US, and other related entities.’

The letter went on to say,

“Meanwhile, what little information about Binance’s finances is available to the public suggests that the exchange is a hotbed of illegal financial activity that has facilitated over $10 billion in payments to criminals and sanctions evaders.”

Amidst the increasing scrutiny, the renewed fear of a Silvergate Bank collapse hit investor sentiment.

The hopes of the crypto winter ending have waned in the wake of the FTX bankruptcy. This week, the crypto-friendly bank delayed the release of its annual report, raising the possibility of another crypto-related bankruptcy.

However, the difference with FTX is that Silvergate Bank is a Main Street name. The collapse could result in more backlash from regulators and lawmakers. Significantly, the FDIC does not protect crypto holders. The Friday morning pullback comes as investors consider the possibility of a Friday night shutdown.

The Day Ahead

Investors should continue to monitor the crypto news wires for regulatory activity and US lawmaker chatter. Silvergate Bank, Binance, and FTX updates need consideration, with news from the ongoing SEC v Ripple case also influential.

Economic indicators will also draw interest. The US services sector and Fed chatter will influence the afternoon session. ISM Non-Manufacturing PMI numbers for February will deliver to the NASDAQ Composite Index and the crypto market direction.

However, we expect Silvergate Bank, lawmaker chatter, and regulatory activity to be the key drivers.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 4.85% to $1,568. A bearish start to the day saw ETH slide from an early morning high of $1,649 to a low of $1,550. ETH fell through the First Major Support Level (S1) at $1,619 and the Second Major Support Level (S2) at $1,589.

Technical Indicators

ETH needs to move through the Major Support Levels and the $1,648 pivot to target the First Major Resistance Level (R1) at $1,678 and $1,700. A return to $1,650 would signal a breakout session. However, the crypto news wires should be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,707 and resistance at $1,750. The Third Major Resistance Level (R3) sits at $1,766.

Failure to move through the Major Support Levels and the pivot would leave the Third Major Support Level (S3) at $1,530 in play. However, barring the collapse of Silvergate Bank, ETH should avoid sub-$1,500.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 200-day EMA, currently at $1,606. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through S2 ($1,589) and the 200-day EMA ($1,606) would give the bears a run at S1 ($1,619), the 100-day EMA ($1,632), and 50-day EMA ($1,635). A move through the 50-day EMA would send a bullish signal. However, failure to move through the 200-day EMA (1,606) would leave ETH under pressure.

Bitcoin (BTC) Price Action

This morning, BTC was down 4.89% to $22,325. A bearish start to the day saw BTC slide from an early high of $23,482 to a low of $21,968. BTC fell through the Major Support Levels before a move back through S3 ($22,302).

Technical Indicators

BTC has to move through the Major Support Levels and the $23,492 pivot to target the First Major Resistance Level (R1) at $23,780. A return to $23,500 would signal a breakout session. The crypto news wires and Fed chatter should be crypto-friendly to support a broad-based crypto rebound.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $24,087. The Third Major Resistance Level (R3) sits at $24,682.

Failure to move through the Major Support Levels and the pivot would leave the Third Major Support Level (S3) at $22,302 and sub-$22,000 in play. However, barring an extended crypto sell-off, BTC should avoid sub-$21,500.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 200-day EMA ($22,997). The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through S2 ($22,897) and the 200-day ($22,997) would support a breakout from S1 (23,185) to bring the 100-day ($23,491) and 50-day EMA ($23,497) EMAs into view. However, a fall through S3 ($22,302) would support a return to sub-$22,000. A move through the 50-day EMA ($23,497) would send a bullish signal.