For Bitcoin investors, it seems as though things have gone a little haywire after the collapse of FTX, and now the “voluntary liquidation” of crypto-focused bank Silvergate.
Data from CoinGecko showed that key metrics such as trading volume have fallen by $9 billion in the month of March at roughly $25 billion as opposed to $36 billion in February.
In addition to that, transfer volume and the total number of transactions on the Bitcoin blockchain have plummeted by 35% and 17% respectively in the last 24 hours.
At the same time, the number of active addresses has slid by 10%, stats provided by CryptoQuant showed.
But, according to Guilhem Chaumont, CEO of Paris-based market maker and brokerage Flowdesk, the decline does not indicate that investors are running or panicking.
While acknowledging the obvious dip across the ecosystem brought on by Silvergate’s financial difficulties, Chaumont opined that Bitcoin traders are taking a break and deciding what to do next.
He also likened Bitcoin’s lackluster trading activity to the “calm before the storm,” adding that ” the situation can still go either way.”
It certainly has a ‘calm before the storm’ feel to it. So the market is not shaking it off — FTX has made us all very much aware that anything can happen. However, the situation can still go either way — meaning that if news about a reassuring resolution came, the confidence that characterized the first two months of 2023 could return.
Silvergate became one of the first legacy fintech institutions that fell victim to the crypto crash after it announced to write off its assets and close its bank down.
The crypto-focused bank’s issues started after FTX’s collapse and increasing scrutiny from regulators including an ongoing US Department of Justice investigation into its operations.
The incident spurred selloffs as investors rushed to protect their assets.
Bitcoin: FED Chair’s Flip Flop
Bitcoin’s value further declined as Federal Reserve Chairman Jerome Powell proposed raising the rate at the forthcoming FOMC meeting by 50 basis points rather than the previously anticipated 25 basis points.
But, Powell’s stance softened the next day when it emphasized that the central bank has not yet decided on the amount of the rate hike.
Many thought that this might have been an effort to allay the market’s hawkish anxieties, which culminated in Bitcoin falling below the $21k level.
Right after Powell’s “no decision” comments, Bitcoin momentarily recovered to $22,000. At press time, BTC is trading at $21,659, down by nearly 2% in the past 24 hours.