Bitcoin steadied on Thursday near its lowest since mid-February, after US crypto-focused bank Silvergate said it would voluntarily liquidate, the latest in a series of high-profile crypto collapses triggered by the collapse of the FTX exchange.
Silvergate Capital Corp said on Wednesday it planned to close and voluntarily liquidate, after warning last week that it was evaluating its ability to operate as a going concern. The California-based company, which was a key banking partner for crypto businesses, had been hit by investors rushing to withdraw around $8 billion of deposits after the sudden bankruptcy of FTX last year.
Bitcoin was last down 0.4% at $21,624, having fallen 2.2% on Wednesday to a 3-1/2 week low of $21,590.
Investors and analysts said the market impact of the shuttering of Silvergate – seen as an important bridge between the crypto sector and traditional financial world – was limited as it had been widely expected.
Multiple partners of the bank, including major crypto exchange Coinbase Global Inc, severed ties with Silvergate last week. Others, including Binance, said they did not have any asset losses at Silvergate.
“Investors in bitcoin have had some time to digest this news, they are also much more focused on macro-economic developments,” said James Butterfill, Head of Research at digital asset manager CoinShares.
“With growing doubt in the bond market over the risk of the damage further interest rate rises will do to the US economy, it is supporting bitcoin prices to some extent, despite the bad news on Silvergate.”
Bitcoin has gained more than 30% so far this year, clawing back some of its losses of almost 65% in 2022 that were triggered by a string of high-profile corporate failures in the crypto world.
Published in The Express Tribune, March 10th, 2023.