Cutting off access to USD for crypto firms is deliberate, Matrixport
Last week, news quickly circulated that Silvergate Bank, a crypto-friendly bank, was in hot water and had to stop offering USD services to its roughly 1,600 crypto customers. This obviously had a significant impact on the market as assets such as Bitcoin and Ethereum quickly lost a good chunk of their gains from January. Even now, the market continues to feel the after effects of the Silvergate announcement, but what is even more shocking is the fact that the USD drought from crypto firms may be deliberate.
Is it deliberate to stop USD transfers?
In a new report, Matrixport’s head of research Markus Thielen highlights the latest developments in the crypto space when it comes to USD transfers. The first crypto platform to succumb was the Binance exchange which announced that it would no longer be able to handle USD transfers. Now another exchange has followed.
On Monday, ByBit revealed that it will stop USD transfers on the platform from Mach 10. All of these can be linked to the Silvergate crisis which has undoubtedly affected the space immensely. However, the Matrixport report notes that all of these may be intended to reduce access to USD for crypto companies.
The report points to these three events as possible evidence of this cut-off, which has already sent cryptocurrency prices plummeting ever since. It has also affected the trading volume of bitcoin since then, which is already down around 50% during this time. For this reason, there may be more price falls in the future, Thielen reasons, and points to the decline in bullish sentiment among investors.
“Bitcoin and Ethereum futures markets are also showing less bullish sentiment with the fundamentals trading negative,” the report notes. “We are in a situation where accidents can happen, and prices can go lower.”
Market cap declines to $988 billion | Source: Crypto Total Market Cap on TradingView.com
Will the crypto market succumb to the pressure?
Since the initial crash following the Silvergate news, the crypto market has managed to hold up quite well. Although the total market capitalization fell below $1 trillion after the market crash, it maintained a tight range of $970 billion to $990 billion even through the weekend, reflecting the tug-of-war between bulls and bears for control of the market.
Even now, Bitcoin’s price holding above $22,000 still shows that there is still some bullish sentiment in the market. This is probably what is still holding the market up, but with ByBit set to stop USD transfers, it will likely have an impact on the price, which will continue to push the market cap down.
However, there is still a lot of support for Bitcoin above the $20,000 level, which is likely to be the main region of support for bulls ahead of the next bull market. So despite the expected selling pressure expected in the market, BTC is likely to hold above its January lows.
