Cryptocurrency prices experienced a decline following the announcement of Silvergate’s decision to shut down. Bitcoin decreased by 8.50% to $19,549 on Friday, while Ether lost around the same amount, last trading at $1,402, according to CoinMarketCap data. The drop began late Wednesday, shortly after Silvergate Capital announced the liquidation of its crypto-friendly bank.
The crypto market had priced in the news in advance, as the relatively small size of the drop suggests. Conor Ryder, a research analyst at Kaiko, believes investors had already accounted for the announcement last week when the company warned of the possibility of ceasing operations and closing down the Silvergate Exchange Network (SEN).
The decline deepened, following SVB Financial’s announcement that it would raise over $2 billion in capital to offset bond sale losses. While SVB has claimed it has minimal exposure to crypto, some people have linked the two events due to the need to recapitalize following the Silvergate incident.
Despite the recent setbacks for the industry, including the Silvergate developments and the post-FTX regulatory crackdown, Bitcoin and Ether have remained relatively stable. Even their single-digit drops on Thursday pale in comparison to the 60% and 41% declines suffered by SVB and Silvergate, respectively.
Bitcoin’s correlation with stocks has decreased since 2022, and its volatility has remained near historic lows for the past few weeks.
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