The value of bitcoin has fallen by almost 10% over the past two weeks, with the cryptocurrency once again falling below the $22,000 mark. The fall is mainly due to the collapse of the Silvergate crypto bank.
Bitcoin (BTC) continues to lose value, with a 1.4% decline recorded in the last 24 hours. In general, over the past two weeks, the cryptocurrency has already fallen by almost 10%. This Thursday, BTC also fell below the $22,000 mark. For the first time since mid-February, according to CoinGecko. In truth, Bitcoin even recovered, in part due to the interest shown in NFTs registered using the Ordinals protocol.
Obviously, this new reverse gear is for a reason. It’s very simple and can be summed up in one word: Silvergate. The American crypto bank has been in the news for weeks, and cryptocurrencies are paying the price. Bitcoin, like most altcoins.
FTX is at the center of the problem again and again
This Wednesday, March 8, Silvergate capitulated. The cornerstone of the crypto sector has broken, signaling the end of its activities and the return of deposits. In its press release, the bank explains that it has made this decision “due to recent developments in the sector and regulations.”
To understand the impact of this decision on the industry, you need to understand what Silvergate stands for. In 2013, this small California bank switched to cryptocurrencies. In a few years, Silvergate has become a benchmark for the industry, mainly with institutions and exchanges. Listed on the prestigious New York Stock Exchange, the bank has some of the largest companies in the sector among its clients. Coinbase, Paxos, … As well as BlockFi, Gemini and FTX.
2022 has been a disastrous year and Silvergate is somehow resisting the storm that has hit the crypto sector. However, serial bankruptcies are seriously undermining the crypto bank. The situation with FTX with the scandal around this case was the worst. Silvergate soon comes to the attention of the authorities, who accuse him of violating his obligations. Add to that net losses approaching $1 billion in the last quarter of 2022 and you have the current situation. In other words, the bank cannot recover on its own.
So it’s normal for cryptocurrencies to suffer from the Silvergate shutdown, but that’s not the point. Now that the crypto bank is down, it needs a replacement. However, in the current situation, Silvergate has been one of the few traditional financial institutions supporting the sector. Without it, things can get worse before they get better.