Bitcoin falls to its lowest price in weeks as crypto markets tumble amid Silvergate troubles
The price of bitcoin hit a two-week low as the industry's crucial banking partner faces financial troubles.
Silvergate has experienced a steep downtrend in deposits, along with a 95% plunge in share price over the past year.
Bitcoin saw its largest one-hour drop since the blowup of FTX in November.
Cryptocurrency markets are tumbling as the industry's once go-to bank faces a slew of financial woes, potentially threatening global crypto liquidity.
The price of bitcoin hit a two-week low early Friday and experienced its largest one-hour price drop since the blowup of bankrupt exchange FTX in November. The token is trading 4% lower at $$22,394, per Messari.
Other major tokens followed suit. Ethereum shed 3%, falling to $1,573.
The market moves come after several companies like Coinbase, Circle, Galaxy Digital, and Paxos cut ties with Silvergate, which is delaying its annual report due to greater losses, flagging doubts about the future of its business.
Many large digital asset exchanges work with Silvergate for transactions between entities, and a dent in those relationships could impact industry liquidity.
Silvergate was entangled in a number of ailing firms such as FTX, resulting in a massive decline in deposits at the bank amid broader crypto market contagion. Shares of Silvergate have dropped 95% in the past year.
"Fears are growing that a crypto-focused bank failure could constitute a new hit to investors' confidence after the bankruptcies of major crypto players during the last few months," Wael Makarem, senior market strategist at investment broker Exness, told Insider. "As a result, the market could be exposed to new price corrections while investors could be concerned about a potential impact on other market players."
Makarem added: "This incident could strongly dent the market's recent rebound as cryptocurrencies remain in a delicate position. Additionally, the dwindling number of companies operating in crypto could add to the concerns."
Crypto's total market capitalization sits above $1 trillion, per Messari, roughly two-thirds below its record high in November of 2021. Investor sentiment in digital assets took a beating in the past year on a series of crypto company bankruptcies, along with a rise in borrowing costs from a hawkish Federal Reserve.
Sentiment may have deteriorated further in cryptocurrency markets as traders brace themselves for the Fed's next move to tamp down inflation, which remains above the central bank's target.
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