March 6, 2023: On Friday, Cryptocurrency prices decreased as investors weighed the most delinquent financial sufferings at Silvergate Capital and got what a potential bankruptcy at the crypto bank could suggest for the broader crypto industry.
Bitcoin dipped by more than 4% to $22,364.21, according to Coin Metrics. Ether decreased by 5% to $1,565.58.
The drop arrived late, hours after a few crypto companies said they’d stopped taking or starting payments to or from Silvergate, such as Coinbase, Galaxy Digital, and Paxos Bitstamp.
Silvergate, which has evolved into the go-to bank for cryptocurrency businesses, gave notice Wednesday that it will only meet an extended deadline to file its annual report and has cautioned it might not be able to operate for another year.
“The bearish turn could certainly be a postponed reaction to Silvergate’s ongoing issues,” stated Clara Medalie, director of research at Kaiko. “Many large exchanges and market owner partner with Silvergate for fast transactions amid entities and any halt inactivity could impact global crypto liquidity.”
Bitcoin and ether costs remained flat throughout the day, while shares of Silvergate dropped 57%.
“To begin 2023, crypto markets experienced a solid rally to six-month highs after a slowdown in FTX contagion, but the Silvergate information has renewed the tensions around liquidity and risk,” Medalie further said.
Bitcoin has recovered this year after tumbling over 60% in 2022 to below $17,000 between the pullback in trouble assets and the FTX implosion, which was a Silvergate customer. After the recent plunge, bitcoin is up over 30% this year, though it could be in for a month of sideways trading currently that the broader recovery in risk support has disappeared.