Bitcoin Dropped Almost 5% Thursday Night, Which Was Its Biggest Drop In One Hour Since FTX
Bitcoin Dropped Almost 5% Thursday Night, Which Was Its Biggest Drop In One Hour Since FTX

Bitcoin Falls To A Two-week Low As The Fallout From SilverGate Hurts Cryptocurrencies

As investors processed the unraveling of a vital industrial payments network, the price of bitcoin fell to its lowest level in around two weeks, which was part of a larger retreat across the cryptocurrency markets.

By of 8:30 a.m. local time on Friday in London, trading was 4.4% lower at $22,380 for the largest token, which had earlier dropped as much as 6% before recovering some of those losses. Ether, Avalanche, and the meme token Dogecoin were among the lesser-known cryptocurrencies that experienced price drops.

The problems experienced by the cryptocurrency-friendly US bank Silvergate Capital Inc. are being absorbed by the digital asset industry, which has stated that it is evaluating its ability to continue operating as a sustainable business.

The financial institution provides a widely utilized payments network that makes it possible for cryptocurrency businesses to move monies in real time. However, a significant number of digital asset exchanges, stablecoin issuers, and trading desks have discontinued accepting or starting payments via Silvergate.

“Silvergate is one of the primary US dollar banking providers for the crypto sector,” said John Toro, head of trading at digital-asset exchange Independent Reserve. “Silvergate is one of the main US dollar banking providers for the crypto industry.” Any concerns about liquidity will have a direct effect on market conditions and may make some customer money more difficult to obtain and less available.

Bitcoin Falls To A Two-week Low As The Fallout From SilverGate Hurts Cryptocurrencies
Bitcoin Falls To A Two-week Low As The Fallout From SilverGate Hurts Cryptocurrencies

The problems experienced by Silvergate are the most recent manifestation of the epidemic that began in November with the failure of the FTX cryptocurrency exchange. In the wake of the failure of FTX, a significant customer of the bank, there was a rush on deposits at the financial institution the previous year.

In addition to this, the digital asset industry must struggle with a broader regulatory crackdown in the United States, as well as the expectation that interest rates will remain higher for a longer period of time in order to combat inflation, which reduces appetite for risk.

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The recent drop in the price of bitcoin brought certain important technical levels into attention. The token’s price has fallen below its 50-day moving average, which increases, in the opinion of some chart analysts, the likelihood of additional price drops.

During volatile times in the cryptocurrency market, investors frequently shift some of their focus to Tether, which is the most widely used stablecoin. The token is widely used to facilitate the trading of digital assets and is designed to have a value of $1 at all times. Despite this, questions have been raised for a long time concerning the composition of the reserves that are used to support the token’s peg.

Paolo Ardoino, chief technology officer of Tether, stated on Twitter that the stablecoin does not have any exposure to Silvergate. Hayden Hughes, co-founder of the social trading platform Alpha Impact, stated that he observed “massive buying” of Tether over the course of a five-minute period during the trading session that took place in Asia on Friday morning. Hughes stated that “we witnessed a robust defense” and went on to say that it was “probably by a market-maker.”

Bitcoin’s gain for the year 2023 has leveled off at 35%, which is still significantly more than the 4% return from global stocks. As a result of tightening monetary policy and a series of blowups that highlighted excessive counterparty risk, cryptocurrency markets suffered a fall worth $1.5 trillion in the previous year.

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