Bitcoin falls as Silvergate fears wipe out bullish crypto traders

“If Bitcoin fails to defend $22,000, the next stop is likely to be around $21,400, where its February low and November high converge,” said Yuya Hasegawa, analyst at crypto exchange Bitbank.

Concerns over problems at Silvergate (ticker: SI) appear to be finally catching up with traders. Silvergate, an influential banker for digital asset companies and a key intermediary in the institutional crypto market, disclosed in filings late Wednesday that securities sales amid a bank run could make it “less than well capitalized.” A federally insured bank, the group said it was evaluating its ability to continue as a going concern and was “in the process of reassessing its businesses and strategies,” also noting regulatory scrutiny.

Initially, the impact on crypto prices was muted: Bitcoin slowly fell from above $23,500 to below $23,300 between late Wednesday and into Thursday, before prices plunged to near $22,000 early Friday.

“In the short term, the issues facing Silvergate could disrupt the crypto industry,” said Dave Weisberger, CEO of CoinRoutes, an algorithmic crypto trading platform.

Indeed, these issues endogenous to crypto are likely to dominate market sentiment in the immediate term, overshadowing the correlation to the stock market which often sees Bitcoin trade in tandem with

Dow Jones Industrial Average

and

S&P 500.

But traders would do well to keep an eye on equity markets, where investors remain concerned about inflation and interest rates – forces that are likely to remain key to crypto sentiment in the longer term.

Beyond Bitcoin,

Ether

-the second-largest crypto-fell 4.5% to $1,550. Smaller cryptos or altcoins were also firmly in the red, with

Cardano

down 3.5% and

Polygon

fall 2.5%. Memecoins saw even deeper losses, with

Dogecoin

falling 6% and

Shiba Inu

drop 5%.

Write to Jack Denton at [email protected]