Joe Biden Proposes Punitive Tax on Bitcoin Mining. Bitcoin Price Drops to $19.5K. What’s Next?

4 reasons behind this massive liquidation of long positions on Bitcoin.

On Wednesday, March 8, 2023, I brought you an issue entitled “Jerome Powell Cools Down the Bulls. Will the $20K Barrier Hold for the Price of Bitcoin?” in which I explained that the ongoing macroeconomic changes and Jerome Powell's hawkish statements were putting pressure on the Bulls.

I also questioned the growing possibility of the price of Bitcoin falling below $20K again.

Premium subscribers were not surprised because this was part of one of the scenarios I was talking about for the price of Bitcoin in March 2023:

The 3 Scenarios for the Bitcoin Price in March 2023.

Some may say that I didn't need a crystal ball to anticipate this Bitcoin price action. I would reply that they are right, as it became more and more obvious as the bullish move lost steam. The failure to turn the $25.3K resistance on the daily chart into support made it more likely that this scenario would come true.

Typically, when resistance is rejected for too long, traders decide to take profit by placing buy orders lower. That's what happened here. Some traders were all too happy to take profits after the early 2023 bull run in the price of Bitcoin (near +40% in January 2023).

As the Bitcoin price struggled to hold on to $22K in my March 8, 2023 issue, the drop in the Bitcoin price below $20K accelerated during the day on March 9, 2023:

The price of Bitcoin lost over $2K before bouncing back to the $19.5K support I mentioned on March 8, 2023.

As is often the case, it was a massive liquidation of long positions that caused the price of Bitcoin to plummet. In a matter of hours, nearly $100M of long Bitcoin positions were liquidated:

We can see that liquidations continue on this March 10, 2023. It remains to be seen whether the $19.5K support will hold this weekend, especially when the traditional markets are off. In the meantime, the price of Bitcoin is struggling to get back above $20K at $19.9K.

Now that you've seen the consequence, let's go back to the causes. What caused this sudden fear in the markets?

Judge the level of fear:

The Silvergate liquidation announcement continued to weigh but it seemed to me to be pretty much already priced in by the market. Instead, I see 4 other reasons that led to this sudden surge of fear among investors.