Bitcoin BTC Price Continues to Trade Sideways at $22K as Silvergate Concerns Mount
Bitcoin rose to a high of $22,500 early Monday before pulling back slightly below that mark in the afternoon.
The largest cryptocurrency by market capitalization recently traded above $22,400 and well within the narrow range it has occupied since Thursday as traders liquidated about $78 million in long positions due to concerns about Silvergate Capital. Bitcoin (BTC) had been trading around $23,500 for much of last week entering February.
“It appears that the more Wall Street positions itself for a bigger sell-off in risky assets, the markets refuse to break,” Edward Moya, senior market analyst at forex market maker Oanda, wrote in an email.
In a newsletter Monday, Jeff Dorman, chief investment officer at investment firm Arca, wrote that the crypto market’s stability over the past few days suggested the price drop late Thursday “may have been just a single seller (or small group of sellers) rather than a market-wide panic.”
ETH, the second largest cryptocurrency, recently changed hands at $1,569, up 0.4% from the same time on Sunday. The CoinDesk Market Index, which measures the overall performance of the crypto market, was flat for the day.
BTC and ETH have fallen 3.1% and 2.5% respectively in the last seven days. A report by crypto data firm Kaiko highlighted that the funding rates of these two assets turned negative last week, indicating bearish market sentiment.
California-based Silvergate said in a filing last week that the impact of recent events — particularly the collapse of the FTX exchange and subsequent regulatory actions — raised questions about the bank’s ability to “continue as a going concern.” In the following days, the fallout from the industry has increased with several businesses, including Coinbase and Paxos, cutting ties with the bank. Shares in Silvergate ( SI ) closed down 6.2% on Monday.
“Silvergate made the mistake of merging traditional banking with a centralized cryptocurrency exchange model,” Sheraz Ahmed, managing partner at blockchain consultancy Storm Partners, told CoinDesk. Ahmed sees an increasing likelihood of the crypto market contracting as the industry endures new liquidity crises.
“The first crypto bull market to attract institutional involvement ended not too long ago, and many still needed to prepare for a steep market decline,” he said. “Unfortunately, those who didn’t are paying.”
Eric Chen, CEO and co-founder of the decentralized finance (DeFi) protocol Injective, noted in an email to CoinDesk that it is important to monitor whether exchanges that previously used the SEN service can “smoothly integrate new payment partners” to “ensure uninterrupted settlement speed and volume.”
“It is important to remember that properly capitalized and managed exchanges should be able to weather this storm with minimal disruption to their operations,” he added.
