Bitcoin BTC Price Drops Below $21K To Hit 7-Week Low As Silvergate Bank Shutdown Shakes Investors
Bitcoin (BTC) fell over 8% in the past 24 hours to sink below $21,000 for the first time in seven weeks as investors continued to worry about the fallout from crypto-friendly bank Silvergate Bank’s implosion.
On Wednesday, Silvergate Capital ( SI ), the parent company of the lending-focused bank, said Silvergate Bank would “voluntarily liquidate” its assets and close operations.
The largest cryptocurrency by market capitalization traded as low as $20,050 on Thursday, its lowest level since January 14, before regaining some ground to hover just above $20,250.
“This remains a tough environment for crypto given the fallout from Silvergate Capital, so bitcoin could see further selling pressure test the $20,000 level,” Edward Moya, senior market analyst at forex market maker Oanda, wrote in a Thursday note.
Over the past 24 hours, bitcoin posted more than $60 million in liquidations, with over 95% of them being long positions, Coinglass data shows.
Investors became concerned and bitcoin’s price began to fall when Silvergate last week said it had delayed filing its annual report and warned of a potential inability to continue as a “going concern.”
Moya wrote that Silvergate Bank’s shutdown underscored the crypto bank’s ongoing problems. He added that “cryptoverse is now trying to find a new service company to help with payments and other deposit-related services.”
Julius de Kempenaer, senior technical analyst at StockCharts.com, noted in an email to CoinDesk that if more service providers to the crypto market like Silvergate run into trouble, it will “make it harder to access crypto and … not be very inviting to new investors.”
Stefan Rust, CEO of financial data aggregator Truflation, wrote in an email to CoinDesk that Silvergate’s crisis will slow the speed of institutions entering the market because “they don’t have an on-off ramp that scales as quickly.”
“It will also push more crypto business offshore,” Rust wrote. “However, most people will find another on- and off-road that they can use to get around this.”
Most major cryptos were also recently in the red. Ether (ETH), the second largest crypto by market capitalization, was recently down over 8% from the same time on Wednesday to change hands at $1,433.
ETH’s price drop also coincided with Thursday afternoon’s news of the New York Attorney General’s office suing KuCoin, alleging that the crypto exchange offered unregistered securities and commodities. The lawsuit also claimed that ETH, luna and terraUSD were all securities.
Layer 2 platform Polygon’s MATIC token was down over 8% over the past 24 hours and 16% over the past seven days to recently trade below $1. SOL, the symbol of the Solana blockchain, fell 9% for the day to $17.09. SOL, which had been hovering above the $20 range for most of this year, has lost 20% in the past seven days.
The CoinDesk Market Index, which measures the overall performance of the crypto market, was down 4.7% for the day and 11.4% for the week.
Stock markets also struggled, with the S&P 500 down 1.9% Thursday afternoon.
