Bitcoin and Ethereum Plunge as Market Reflects on Silvergate Fears

Bitcoin (BTC) is down 4.5% in the past 24 hours, falling from $23,500 to a two-week low of $22,259 in the early hours of Friday before climbing to around $22,390 per hour of press , data from CoinGecko show.

The major cryptocurrency last traded at these levels on Feb. 15, with the latest price action wiping $20 billion off Bitcoin’s market cap, which now stands at $431 billion.

Ethereum (ETH) followed suit as the market’s second largest cryptocurrency fell 4.6% during the day, changing hands at $1,569 at the time of this writing.

Other major altcoins including gimbal (ADA), Polygon (MATIC), Solana (FLOOR), Peas (DOT), and avalanche (AVAX) suffered similar losses in the 4% to 5% range.

The tastes of Dogecoin (DOGE) and Litecoin (LTC), however, was hit harder, losing 6.2% and 8.5% in value respectively.

The market capitalization of all cryptocurrencies lost around $48 billion overnight, currently standing at $1.077 trillion, per CoinGecko.

Silvergate drags the crypto

As for the reasons for the latest sharp price drop, it can likely be attributed to recent developments surrounding Silvergate Bank, which provides a payment network to many crypto businesses.

Alarm bells rang on Wednesday when the Californian company delayed releasing its annual 10-K report, saying further unreported losses could mean the bank is “less than well capitalized.”

Silvergate, who has also worked with the crypto exchange now bankrupt FTX and its sister commercial company Alameda Research, formerly reported a net loss of $1 billion as well as a drop in customer deposits of approximately $14 billion in the last quarter of 2022.

To fund the wave of withdrawals it faced during this time, the crypto-friendly bank secured a $4.3 billion loan from Federal Home Loan Bank and sold approximately $5.2 billion of debt securities.

On Wednesday, however, Silvergate admitted it was assessing the impact of its recent losses and determining “its ability to continue in business.”

Like many crypto companies including RegisterX, CoinbaseAnd Attachedamong othersMoved either to move away from Silvergate or to cut ties altogether, the company’s shares went into a tailspin, falling 57% to an all-time low of $5.72 at the closing bell on Thursday.

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