Cryptocurrency Markets Plunge as Silvergate Closes its Doors


Cryptocurrencies tumbled on Thursday morning in Asia following the announcement of the voluntary liquidation of U.S. crypto bank Silvergate. Bitcoin plunged through the US$22,000 barrier, with Ether and many other top cryptos also taking a hit. Solana took the biggest hit among the top ten coins by market capitalization as the industry’s total capitalization tumbled below the US$1 trillion mark. XRP was the only gainer on the day. U.S. equities closed mixed on Wednesday, shaken by the possibility of higher interest rates than expected this year.

See related article: Silvergate teeters as regulators circle and crypto firms cut ties

Key Points

  • Bitcoin dropped 2.34% in the last 24 hours to US$21,729 as of 09:00 a.m. in Hong Kong, according to CoinMarketCap data. That marks a loss of 8.06% over the last seven days. However, the most dominant coin by market capitalization is still up more than 30% so far this year after a strong start to 2023 despite the slump last year due to crypto bankruptcies and scandal.

  • Ether, the second-largest cryptocurrency, fell 1.99% to US$1,535, representing a weekly loss of 7.55%. Nonetheless, like Bitcoin, it holds gains for the year so far, up 28%.

  • Solana headed the list of losers, with its price falling 8.86% to US$18.49 and 17.49% for the past seven days.

  • XRP continued its upward trend despite the Silvergate Bank calamity in the wider market, rising 2.69% to US$0.39. Stuart Alderoty, the chief legal officer of XRP-powered crypto payment network Ripple Labs, tweeted on Wednesday that the court supported some of Ripple’s defenses in the lawsuit brought against the company by the U.S. Securities and Exchange Commission. “We have always felt confident about our case and with each ruling, even more so,” said Alderoty in the tweet. The token gained 2.50% over the seven-day period.

  • Shiba Inu dipped 0.55% in the past 24 hours, but still managed to unseat Litecoin as the 10th largest non-stablecoin cryptocurrency by market capitalization. The price of the meme token briefly spiked on Wednesday, following an announcement that Shibarium – a Shiba Inu layer-2 blockchain for Web3 and gaming — will launch its beta version this week.

  • Silvergate Capital Corp. announced on Wednesday its intention to close operations and liquidate Silvergate Bank, a California-based lender that served the crypto industry, due to mounting financial losses and regulatory investigations it faces.

  • The total crypto market capitalization dropped 2.26% in the past 24 hours to US$995.70 billion. Total trading volume over the last 24 hours dipped 0.43% to US$44.50 billion.

  • U.S. equities traded mixed on Tuesday. The Dow Jones Industrial Average closed 0.18% lower, the S&P 500 edged up 0.14%, and the Nasdaq Composite Index rose 0.40%.

  • Federal Reserve Chair Jerome Powell told Congress on Wednesday that the central bank has not decided on the size of the interest rate hike expected at the bank’s meeting later this month, but will assess the latest economic data on inflation first. Powell said on Tuesday that steeper interest rate hikes might be needed to reduce inflation, sparking a sell off in U.S. equities the same day.

  • U.S. job data released on Wednesday suggests inflation remains entrenched, with private employers adding 242,000 jobs in February 2023, beating the Reuters expectation of 205,000, according to a report by Automatic Data Processing.

  • The Fed has raised U.S. interest rates eight times since March 2022, with the current rate between 4.5% to 4.75%, the highest since October 2007. Analysts at the CME Group expect a 21.4% chance that the Fed will raise rates by another 25 basis points this month. They also predict a 78.6% chance for a raise of 50 basis points, an increase from 69.8% on Wednesday.

See related article: Fed’s Powell says stablecoins could have role in financial sector if properly regulated

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