Silvergate Bank fears shaking the crypto industry, bitcoin falls
Yahoo Finance’s Jared Blikre joins the Live show to discuss how cryptocurrencies are trading as concerns about a Silvergate Bank collapse swirl.
Video transcription
[AUDIO LOGO]
– Welcome back to “Yahoo Finance Live.” A dramatic drop for Bitcoin as concerns mount over the contagion caused by crypto-focused lender, Silvergate. Let’s move over to YFi Interactive where “Yahoo Finance’s” Jared Blikre is standing by. Jared?
JARED BLIKRE: Yes. Silvergate’s earnings came out a couple of days ago. Well, actually they should, and that’s a problem. They had to file a notice that they were going to be late with the SEC. A bunch of analysts have weighed in, and I’ll get to that in a second, but I just want to show you the reaction in Bitcoin.
This is a pretty big deal. Silvergate, one of the big bankers of the crypto industry. Here’s a year-to-date chart of Bitcoin, and you can see that this is the biggest down candle we’ve seen in a long time. And just on an intraday basis, Bitcoin never sleeps. This happened while I was sleeping.
Guess what? Pretty steep drop here from 23,500, down again to about 22,300. So a pretty big handle that we’re looking at right there. Now, longer term, I think this is significant because 25,000, that’s the highest that we looked at before, and that’s a high right there for 2023.
This was a level that was pretty much in play for a long time, and the inability to get over it is a little worrying. The next stop would be 30,000 just because round numbers have been in play here, but that’s actually where a lot of price action is converging as well, something around there.
So I guess the bottom line is we’ll have to see what the impact of this is, but we’ve already got some analyst action and I think this kind of encapsulates that. This is from Canaccord Genuity. First of all, they downgrade Silvergate to hold from buy price target down to $9 from $25, but they quote — here’s a quote from them. “Given its success–” and this is Silvergate– “And after becoming a key component of the financial services infrastructure of the digital asset industry, the bank has become somewhat of a lightning rod victim of circumstance, given the industry’s news flow in recent years A few months.”
One more quote. “We are not aware of any chartered bank in the history of the United States -” going back that far – “that survived such a deposit withdrawal as Silvergate posted FTX late last year.” I would assume that includes the Great Depression, where we saw a series of bank failures.
So Silvergate is still a growing concern, but there are questions about its survival, and we’ve seen this before. Let’s take a look at a Bitcoin chart and just plot what has happened over the past year. In response to the FTX fallout, of course we had Celsius first and some other failures, basically, in the middle of last year, but these were the losses we’re looking at.
Now, when you have leverage built up in a system like crypto, it can take a long time to deflate that, and one of the main things that I’ve been looking at is Binance and the Binance token, and that’s something that we I’ve still seen kind of hover around $1 and that’s what it’s supposed to do. So as long as the Binance token, I’d say, doesn’t deviate too much from the benchmark, you probably have a decent chance here of avoiding another disaster.
But let me go back to a Bitcoin chart. Guess what? If we go if we go to see the declines that we had from several years ago, we could go all the way back to 13,000 and that’s if we have another big failure here. And that would be the big one, Binance. So I don’t know what’s coming here, but that would be my warning.
Before I go, I just want to take a look at crypto stocks, how they are doing today. We can see a kind of mixed table here. And let’s just take a look at what happened during the week. Much more red than green. Silvergate down 61%. Looks like Marathon is down 7.5%. Coinbase, let’s see if it’s there.
– Top left, wow. I am surprised.
JARED BLIKRE: Yes. Top left. Coin base up 6%. Did they announce earnings this week or was it last week?
– They also made the move not to engage in any of the transfers from Silvergate.
JARED BLIKRE: Yes. Well I think–
– And they’re going to be doing maintenance this weekend, right? I think they are closing for maintenance?
JARED BLIKRE: Coin base?
– Sounded right. Yes.
JARED BLIKRE: I’ll take your word for it. I know Coinbase has shut down access to Silvergate, along with just about everyone else. So that’s what happened there. But here is the Coinbase chart. You can’t see much of a promise, despite the 7% gain that we saw. Not much of a lift off these lows yet, folks.
– Thanks. Appreciate it, Jared. I tried to find more details about that shutdown of Coinbase. Do you understand?
– That is correct. Yes. Eight Hours – Eight hours to complete is the technical system upgrade that will begin on Saturday, March 4th at or around 8:00 AM. Coin base.
JARED BLIKRE: Coinbase is sleeping. Bitcoin does not sleep.
– Yes it is true.
JARED BLIKRE: 3 hour nap. That’s what we’re talking about – that’s all they need.
– Just a nap.
