Crypto Market Falls Below $1 Trillion After Silvergate’s Exit Announcement
Bitcoin offices in Istanbul, Turkey seen on May 11, 2022. . In parallel with the global stock market, which has been stretched by the Fed’s 50 basis point rate hike, he sold $1 billion in cryptocurrencies to keep the stablecoin TerraUSD (UST) at $1. UST, which rose to $0.95 yesterday, fell back to $0.36 today. The daily loss of LUNA, the cryptocurrency of the Terra network, reached 97 percent. Bitcoin also fell to 29,039.54, its lowest level since January. (Photo by Umit Turhan Coskun/NurPhoto via Getty Images)
NurPhoto via Getty Images
The value of digital currencies fell below $1 trillion on Thursday, following the decision by crypto-focused Silvergate Capital
Crypto’s market capitalization was $940.7 billion at 4 p.m. in New York, according to CoinMarketCap and $973.7 billion by CoinGecko’s figures, representing a loss of around 7% from Wednesday night. The market, which was as high as $1.1 trillion last month, approached $3 trillion by fall 2021.
Bitcoin
On Wall Street, the Bitwise Crypto Industry Innovators ETF fell 7.8%.
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Silvergate, which is still trading after it announced it would wind down its business, fell to $2.80, 42% below Wednesday’s close. The news of the planned liquidation came after trading closed yesterday.
Signature Bank fell 12% to $90.76. The lender has a crypto business that it has shrunk, and it sought to distance itself from the industry.
“As a reminder, Signature Bank does not invest in, does not trade, does not hold, does not custodian and does not lend against or make loans secured by digital assets,” CEO and co-founder Joseph DePaolo said in a statement.
The release added that 80% of Signature’s deposits are from “middle market businesses, such as law firms, accounting practices, healthcare companies, manufacturing companies and property management firms.”
Only $16.5 billion of its $89.17 billion in deposits are from digital asset-related clients, it said, pointing to a dividend increase announced in January and a share buyback this week as evidence of its financial health.
Signature’s step back from crypto along with Silvergate’s withdrawal reduces the industry’s bridges to traditional financial services and could hinder the growth of digital assets.
Silvergate shut down its Silvergate Exchange network last week, a key element of its effort to provide a bridge between traditional banking and the digital asset industry. Without the service and following an exodus of large customers, it was unclear what market the Silvergate Bank business would be able to serve.
Earlier, a run on deposits as pressure built on the crypto industry after the collapse of FTX last year led Silvergate to borrow $4.3 billion from the Federal Home Loan Bank of San Francisco, ultimately raising objections on Capitol Hill.
