Bitcoin’s sharp drop toward $22K amid Silvergate Bank turmoil
The crypto industry has recently faced a number of challenges that have contributed to a decrease in the value of major cryptocurrencies such as Bitcoin and Ethereum.
The U.S. job report, which saw Initial jobless claims fall 2,000 from a week prior to 190,000 and stay below expectations of 195,000, might have caused Bitcoin and Ether to slightly decrease overnight. However, it were the concerns surrounding the liquidity of Silvergate bank that led to a further drop in their price.
Big companies in the crypto industry have started reducing or terminating their collaborations with Silvergate due to concerns that it may be “less than well capitalized,” said the bank itself in a filing to delay publishing its annual 10-K report.
In the last quarter of 2022, Silvergate, which had previously partnered with the now-defunct FTX crypto exchange and its affiliated trading firm Alameda Research, reported a net loss of \(1 billion and a decrease in customer deposits of approximately \)14 billion.
Coinbase, Crypto.com, Circle, Paxos, Gemini, BitStamp, Galaxy Digital, Tether, and Microstrategy are among the firms that have distanced themselves from the troubled bank. Amid the increasing number of crypto companies that moved to either reduce exposure with Silvergate or to completely cut ties, the bank’s stock fell sharply by 58% to hit an all-time low of $5.72.
Crypto firms are now seeking new banks to partner with, with Signature Bank being a popular choice for now since Coinbase used it to serve Coinbase Prime customers. Nevertheless, the bank previously shared the plan to withdraw up to \(10 billion in deposits from clients who hold digital assets and ban SWIFT transactions [under \)100,000](https://cointelegraph.com/news/binance-s-swift-banking-partner-set-to-ban-usd-transfers-below-100k).
Cross River Bank in the U.S. and offshore options like Deltec, or Swiss banks such as SEBA AG, still remain. Laura Vidiella, vice president of business development and strategy at digital asset investment firm LedgerPrime, sees the Silvergate news as a short-term shock and it “shouldn’t be at the scale as the same events we experienced last year.”
In addition to these challenges, SEC chair Gensler has called for new rules to prevent crypto exchanges from acting as custodians, adding to the regulatory concerns surrounding the industry. When it comes to macro, the DXY recovery contributed to the bearish sentiment as it has increased by 4% since February 3.
According to Fed Governor Christopher Waller, inflation is not coming down as fast as he thought, which means the policy target range “will have to be raised this year even more” if the macro data still looks hot.
Today the UK crypto space took a further hit as well. HSBC and Nationwide Building Society became the latest major banks in the country to impose a ban on their customers’ crypto purchases, following a notice from the British regulator Financial Conduct Authority (FCA) which considered crypto as a high-risk investment.
As a result of breaking negative news, Bitcoin (BTC) fell 4.7% within just 60 minutes in the early hours of March 3 (UTC time), dropping to its lowest levels since February 15. After losing \(1,100 in value in a short period of time, plunging from \)23,400 to \(22,300, the coin managed to climb over \)23,300 at the time of writing, still marking a 4.3% drop in the past 24h.
The crash led to a \(45B loss in [total crypto market cap](https://coin360.com/charts) in just one day, while traders lost \)241.73M in liquidations. Long traders accounted for 91.66% of liquidated positions, seeing $221.56M being wiped out.
Ethereum (ETH) followed suit as it fell 4.26% over the day, changing hands at $1,569 at the time of this writing.
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