Bitcoin battles $20K as trader calls bank chaos '2008 all over again'

Bitcoin (BTC) struggled to reclaim $20,000 support at the March 10 Wall Street open as fears mounted over Silicon Valley Bank (SVB) contagion.

Trader targets $18,000 BTC price

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it nursed fresh losses, reaching $19,569 on Bitstamp. 

The pair had seen further downside prior to the open as embattled SVB Financial saw another 60% wiped off its stock price.

In a move that mimicked crypto exchange banking partner Silvergate, SVB also began to spark knock-on effects for non-U.S. banks on the day.

For Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, the writing was on the wall.

"First it was Silvergate, then Silicon Valley Bank and now First Republic Bank. All sinking massively on the markets. It's 2008 all over again," he summarized.

With that, U.S. equities started the March 10 session in the red as nervous traders waited to see the full extent of the SVB contagion.

Is a banking crisis beginning to hit?
Japanese banks DOWN 5%-6.2%.
Bank of America DOWN 6.2%
Barclays DOWN 6.2%
JPM DOWN 5.4%
Wells Fargo DOWN 6.13%
The dogs which are not barking in the night are Eurozone G-SIBs... Yet!

— Alasdair Macleod (@MacleodFinance) March 10, 2023

"Both Silvergate and Silicon Valley seemingly invested in low yield treasuries before the Fed tightening cycle... treasuries that nobody would want to buy now with "risk free" treasuries at 5% directly from the government," part of comments by trader and analyst Scott Melker stated.

"They were forced to sell at a steep discount, taking on massive losses. This further shakes the market faith, causes more withdrawals and leads to insolvency."

Melker said that the setup was a "slippery slope."

In terms of BTC price action, Van de Poppe meanwhile eyed levels as low as $18,000 for a potential long entry. Above $20,000, on the other hand, was now a short opportunity.

Levels I'd be looking at with #Bitcoin:

- Potential shorts around $20.6K and/or $21.4K.
- Potential longs at $18.1-18.6K including bull. divs and/or HL confirmation. pic.twitter.com/CifRSlaHQW

— Michaël van de Poppe (@CryptoMichNL) March 10, 2023

Commentators see Fed pivot pressure building

A silver lining came in the form of what markets commentator Holger Zschaepitz described as "mixed" U.S. jobs data, helping allay fears of a significant policy shift by the Federal Reserve.

Related: Why is Bitcoin price down today?

"Traders are now pricing in a 25bps hike from the Fed in March following today’s jobs data. Previously, 50bps was priced," popular analytics account Tedtalksmacro added on Twitter, also calling the data a "mixed bag."

Data from CME Group's FedWatch Tool confirmed the switch-around in market expectations for the upcoming Federal Open Market Committee (FOMC) meeting due March 22.

For some, however, the extent of the SVB crisis was reason to believe that the Fed would have no choice but to abandon its monetary tightening and "pivot" on interest rate hikes.

"SVB dealing with a full blown run on the bank. The bad news is this is going to accelerate very quickly into a systemic crisis," crypto entrepreneur David Bailey reacted.

He added that "The good news is the Fed will have no choice but to pivot imminently or risk imploding the entire financial system."

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.