The cryptocurrency industry experienced a difficult year in 2023, with numerous internal companies and projects failing and resulting in declining prices, bankruptcy filings, and investor losses. The year started off on a positive note, with Bitcoin surpassing $17,000 and reaching a multi-month high of $25,000. However, the asset stalled and dropped back down to around $22,000, due to factors such as the US government selling seized BTC from Silkroad on Coinbase and further interest rate hikes.
The situation worsened when Silicon Valley Bank, a large commercial bank, collapsed after failing to raise additional capital. It turned out that some crypto firms had exposure to the failed bank, including Circle, the firm behind the second-largest stablecoin – USDC. This caused USDC to lose its dollar parity and plummet to and below $0.9.
The news of Silicon Valley Bank’s collapse and its effect on the crypto industry caused Bitcoin’s price to drop all the way down to $19,500, its lowest position in two months. This caused the Fear and Greed Index to decline to 33, a state of fear. This was a stark contrast to the index being above 55 in February, showing a greedy sentiment, and being around 50 last week – neutrality.