Silicon Valley Bank Collapse Hammers Dogecoin Price Down 23%

The cryptocurrency market has seen a decline in the value of Dogecoin (DOGE) as huge amounts of fear, uncertainty and doubt swept the market after Silicon Valley Bank collapsed on Friday morning as a result of a bank run and a capital crisis triggered the second largest failure of a financial institution in United States history.

The collapse of crypto-friendly bank Silvergate has also triggered a market sell-off with the market cap of top meme tokens down nearly 11% in the 24-hour period. The trading volume of DOGE has increased by almost 30%, indicating an intense market sell-off is imminent.

At the time of writing, DOGE was trading at $0.0640, indicating a 21% decline over the past seven days. In addition, data from crypto market tracker Coingecko shows that the dog-themed coin has lost 11% of its value in the last 24 hours alone.

The meme token has fallen by 31% in the last 30 days and by 24% in the last two weeks, with only a 2% increase since the beginning of 2023.

For its part, Bitcoin – the largest crypto by market cap – saw its price drop from the $21,000 level, trading at $20,372 at the time of writing as BTC investors brace for the next episode in the ongoing crisis that hit Silicon Valley Bank.

The macroeconomic uncertainty surrounding DOGE is due to its highly speculative nature and lack of fundamental value. Its value is largely driven by demand from investors and traders, making it unpredictable and prone to sudden changes in sentiment.

Silicon Valley bank failure drags down DOGE

But today’s price decline in DOGE can be largely associated with the sudden implosion of Silicon Valley Bank.

SVB’s decline was partly attributed to the Federal Reserve’s sharp increase in interest rates during the previous year.

SVB stocks dropping. Image: WSJ

The banks had accumulated long-term government bonds that seemed low risk when interest rates were almost at zero.

But when the Fed stepped up interest rates to deal with inflation, the value of these investments fell, resulting in unrealized losses for the banks.

Despite this, DOGE’s 24-hour trading volume has returned to $681 million, up 103%, generating buzzing market activity that can easily translate into gains when conditions are right.

Image: Watcher Guru

Will SVB Implosion Impact Shibarium launch?

On the other hand, the SHIB army has had reason to celebrate as the burn rate of their favorite meme coin increased by a staggering 36,497.56%, as reported by Shibburn.

The upcoming release of the Shibarium Beta layer-2 blockchain could explain the recent increase in the crypto’s burn rate.

However, how this plays out may depend on how bad the collapse of SVB is and how it affects investor sentiment and excitement around Shibarium’s launch.

Crypto total market cap currently at $915 billion on the daily chart | Chart: TradingView.com

More pain for the crypto market?

Meanwhile, some market observers now expect more pain for the crypto sector following the failure of Silicon Valley Bank and the proliferation of R&D about hidden risks in the financial and banking sector in general.

Christopher Whalen, chairman of Whalen Global Advisors, was quoted by Reuters as saying:

“There could be a bloodbath next week […] short sellers are out there and they are going to attack every single bank, especially the smaller ones.”

While SHIB continues to generate busy market activity, larger addresses have begun to offload their assets, leading to a decline in the number of whale transactions.

Meanwhile, analysts are keeping an eye on the next development at Silicon Valley Bank – and how it could affect Dogecoin’s price in the coming days.

– Featured image from Mental Floss