In the US, Silvergate Bank has ceased operations. The financial institution was known for its crypto customers. The price curve of Bitcoin (BTC) reacted with a daily minus of 8 percent, trend critical.
Bitcoin (BTC) is currently struggling to stop a negative trend at the psychologically important mark of 20,000 US dollars. Because in the U.S., Silvergate Bank has filed for its dissolution in self-administration, shocking the crypto industry. Bitcoin, as the lead currency of the crypto market, recorded a daily minus of 8 percent and now finds itself at the level of a seven-week low. Leading altcoins from Ethereum (ETH) to Solana (SOL) fared similarly badly, all of which saw gains from previous weeks vanish into thin air virtually overnight.
As far as is known, the demise of Silvergate Bank is a late consequence of the FTX insolvency from November 2022. Customers of Silvergate subsequently decided to withdraw massive deposits and thus pushed the financial institution into crisis. According to the press release, repayment of all Silvergate customer funds should now be ensured even in resolution. But the withdrawal of Silvergate Bank hits Bitcoin and Co. hard elsewhere.
Because Silvergate Bank had developed into a leading financial services provider for the crypto industry in the U.S. and counted Coinbase, Gemini and Paxos, heavyweights in the industry, among its customers. These, as well as smaller crypto projects, were happy to rely on Silvergate as the place to make deposits and withdrawals in US dollars as fiat currency. That fiat ramp is now gone, and it’s unclear which market participant could replace Silvergate. Experts note that banks in the U.S. are shying away from collaborations with crypto exchanges because of increased regulatory pressure and the need for extensive documentation work. But crypto investors naturally want to be able to rely on being able to exchange their investments in bitcoin and altcoins back into U.S. dollars at any time.
Conclusion: Difficult market situation for Bitcoin, positive impulses remain absent
In addition to the demise of Silvergate Bank, a second piece of negative news for the crypto market came from the US yesterday. In a case against the crypto exchange KuCoin, the New York State Attorney General’s Office wants to achieve that Ethereum (ETH) is classified as a security and thus subject to regulation. This fits with the U.S. Securities and Exchange Commission’s tough stance, which is seen as counterproductive in the crypto industry. In this situation, the near future prospects for Bitcoin and thus also for the overall market do not seem very encouraging; many observers fear further price losses.