As US crypto-focused bank Silvergate said it will voluntarily dissolve, the latest in a string of high-profile crypto collapses brought on by the failure of the FTX exchange, Bitcoin stabilised on Thursday near its lowest level since mid-February.
After announcing last week that it was assessing its capacity to continue as a going concern, Silvergate Capital Corp. said on Wednesday that it planned to close and voluntarily liquidate. Investors who rushed to withdraw over $8 billion of deposits following FTX’s abrupt bankruptcy last year hurt the California-based company, which served as a crucial banking partner for cryptocurrency businesses.
Bitcoin dropped 2.2% on Wednesday to a 3-1/2 week low of $21,590, and it last traded down 0.4% at $21,624.
Investors and analysts claimed that as was widely anticipated, the closure of Silvergate, which was considered as a key link between the cryptocurrency industry and conventional finance, had no effect on the market.
This week, several of the bank’s partners discontinued their relations with Silvergate, including prominent cryptocurrency exchange Coinbase Worldwide Inc. Other companies, including as Binance, claimed they suffered no asset losses at Silvergate.
According to James Butterfill, Head of Research at digital asset manager CoinShares, investors in bitcoin have had some time to process this news and are now much more focused on macro-economic trends.
Notwithstanding the negative Silvergate news, the bond market’s rising scepticism regarding the likelihood of the harm that future interest rate increases will have to the US economy is helping bitcoin prices to some extent.
Bitcoin has recovered some of its losses of about 65% in 2022, which were brought on by a spate of high-profile corporate failures in the cryptocurrency industry, by gaining more than 30% so far this year.