The fallout of crypto-friendly Silvergate Bank led to a major market sell-off and pulled Bitcoin to a two-week low. On Friday, it was trading at $22,375, the lowest since February 15, according to coinmarketcap.
“Big crypto-specific development to watch out for is the unfolding of events at Silvergate, as the crypto-friendly bank failed to file its annual report to the SEC, and its stock has come under heavy selling pressure. Markets are watching with bated breath to see if there’s another domino left to fall post the FTX fiasco,” said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.
“While Bitcoin started trading above the $23,000 level, it dropped to $22,300 on Thursday, marking its lowest point in roughly two weeks. The second-largest cryptocurrency, Ethereum, also followed Bitcoin’s trend,” said Alankar Saxena, CTO and co-founder at crypto firm Mudrex.
Silvergate has been a go-to bank for the biggest crypto players. However, since the collapse of FTX, it has come under fire. Around a dozen crypto firms it partnered with have now been shut down or fined. These include names like Celsius and Voyager Digital.
Last year, Sivergate’s customers withdrew $8 billion following the fall of FTX. The bank’s stock has fallen 90 per cent in the last 12 months.
On Wednesday, Silvergate said that it would not be able to file its 2022 annual report (10-K) by an extended deadline of March 16.
“The company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements,” it said in a filing.
Moreover, macroeconomic uncertainty prevails, and the central banks still have hawkish commentary on inflation.
“The slight switch in the commentary to higher interest rate hikes in coming data prints has also made the environment very hawkish,” said Anurag Dixit, founder of crypto management firm Kunji.
In the coming weeks, according to Dixit, the crypto market is expected to stay volatile in anticipation of the next US Consumer Price Index (CPI) and the Producer Price Index (PPI) data. This will be released in the latter half of the month.