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News/Bitcoin loses $22,000 support as Gemini rumors and Silvergate shutdown sparks fear of contagion

Bitcoin loses $22,000 support as Gemini rumors and Silvergate shutdown sparks fear of contagion

Mar 9 2023

12 months ago6 minutes read

Crypto investors experienced further concern when Gemini reportedly lost its major partner J.P. Morgan, according to a CoinDesk report. The banking giant did not respond, but Gemini quickly took to Twitter to confirm that their banking relationship with J.P. Morgan “remains intact.”

These rumors surfaced amid uncertainty about the future relationship between the banking system and the crypto industry in the U.S. However, the bearish sentiment did not stop there as Silvergate confirmed “voluntary liquidation” just a day after reports suggested that the embattled crypto-friendly bank was discussing ways to avoid a shutdown with U.S. federal officials.

This potentially marks another major player’s fallout in the cryptocurrency space. Unlike FTX, Silvergate’s customer deposits are expected to be paid in full, as the bank did not file for bankruptcy. Nevertheless, some U.S. lawmakers have commented on the state of the crypto industry, labeling it a “risky, volatile sector.” Prominent US Senator Elizabeth Warren even called for regulators to “step up against crypto risk,” which sparked criticism from the community.

Some analysts believe that the Silvergate collapse won’t necessarily hurt the crypto industry, but with proposed changes to tax laws, it could increase the risk of crypto companies leaving the U.S. The recently proposed budget includes a provision to close tax loss harvesting on crypto transactions “to reduce wash sales trading,” which is expected to raise up to $24 billion, as per the Wall Street Journal.

According to a report by global investment bank and wealth management firm Morgan Stanley, U.S. regulators may be about to ramp up their actions against banks offering services to crypto companies. The note said the focus of the cryptocurrency market will now shift towards the actions of rival crypto bank Signature, as well as the biggest crypto exchange Binance, and any additional regulatory actions taken against specific companies or products.

Meanwhile, CFTC Chair Rostin Behnam told the Senate Agriculture Committee that Ether and stablecoins are commodities, and stablecoins should be placed under CFTC’s jurisdiction. His comment was said to directly oppose the viewpoint expressed by SEC Chairman Gary Gensler last month, who claimed that securities laws apply to “everything other than Bitcoin.”

Macro forces do not seem to support the crypto upside either at this moment, although Fed Chair Jerome Powell insisted that the central bank has not yet made a decision on the magnitude of the rate hike.

Speaking at a hearing of the House Financial Services Committee, Powell said that the Open Markets Committee would consider the ADP report, the jobs report due on Feb. 10, 2023, the U.S. CPI, and the PCE numbers when deciding its next hikes. Yesterday, the U.S. ADP Nonfarm Employment Change for February exceeded the estimated 200,000 at 242,000, suggesting that wage growth is likely to contribute to continued aggressive tightening.

Due to Powell’s statement, Bitcoin (BTC) experienced a minor recovery, rising from \(22,000 to \)22,200. However, the coin quickly fell into the red zone due to a series of FUD and negative headlines. BTC has been trading around \(21,600 after the news of Silvergate's shutdown sent it under the \)22,000 support level.

At the time of writing, data from Coinglass suggests that March 8 liquidated \(84.67 million of longs and another \)14.7 million of shorts in total. During liquidations, BTC futures traders lost $25.11 million, 86.47% of which were long positions.

It came while institutional money is witnessing a downward trend. As per the research and data provider ByteTree, the number of BTC held by funds has dropped to a level not seen since late October 2021 at around 831,000 as of March 8, representing a 2% drop from the YTD peak of 846,471.

Ethereum (ETH) recorded a -1.26% drop over the past 24 hours, while Polygon (MATIC) remained the biggest loser among the top 10 cryptocurrencies with a -5.49% discount.

Top altcoin gainers and losers

Gainers:

Klaytn KLAY (+7.78%)

Filecoin FIL (+5.57%)

IOTA MIOTA (+3.07%)

Losers:

Immutable X IMX (-12.70%)

Synthetix SNX (-9.74%)

Convex Finance CVX (-9.73%)

NFT Market Map

 

Otherdeed (-11.81%) stepped up as the biggest NFT collection by 24h trading volume while Yuga Labs revealed more details about the second gamified test of its Otherside metaverse platform.

While Otherdeeds dropped in volume, its sister collections like MutantApeYachtClub (+125.06%) and SewerPass (+196.39%) were enjoying gains.

Azuki (+694.70%) also saw impressive increases in daily volume after its team member ZAGABOND.ETH revealed some upcoming changes.

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