A Two-Week Low in Bitcoin Prices Follows Silvergate Fallout

As investors processed the dissolution of a crucial industrial payments network, bitcoin fell to its lowest point in approximately two weeks. This was part of a larger retreat in the cryptocurrency markets.

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The most valuable coin fell as much as 6% before reversing course and trading 4.6% lower at $22,347 as of 6:30 a.m. New York's Friday. Smaller coins like Dogecoin, Ether, and Avalanche all experienced decreases.

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The issues at US bank Silvergate Capital Corp., which has stated that it is evaluating whether it can stay viable, are having an impact on the digital asset market. The bank provides a well-known payments network that makes it simple for cryptocurrency companies to send money in real time. Nevertheless, a lot of trading desks, stablecoin issuers, and digital asset exchanges no longer accept or start Silvergate payments.

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According to John Toro, head of trading at digital asset exchange Independent Reserve, Silvergate is one of the major US dollar banking providers for the cryptocurrency business. Any liquidity issues "may limit the access and availability of some customer funds as well as have a direct impact on market conditions."

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The problems at Silvergate are the most recent illustration of the ripple effects from the fall of the FTX cryptocurrency exchange in November. Last year, after FTX, a significant client, filed for bankruptcy, there was a run on the bank's accounts.

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A greater regulatory crackdown in the US and expectations that interest rates will remain higher longer to combat inflation are further challenges facing the digital asset sector, which is stifling risk appetite.

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Due to Bitcoin's decline, some important technical levels became clear. Some chart analysts believe that the fact that the token has fallen below its 50-day moving average increases the likelihood of more falls.

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At times of market stress, cryptocurrency investors frequently focus some of their attention on Tether, the largest stablecoin. The token, which is frequently used to allow trading in digital assets and is supposed to have a fixed $1 value, has long been dogged by concerns over the composition of the reserves supporting its peg.

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According to Paolo Ardoino, chief technology officer at Tether, the stablecoin has no connection to Silvergate.

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Co-founder of the social trading platform Alpha Impact Hayden Hughes claimed to have noticed "heavy buying" of Tether during a period of five minutes during the Friday am Asian trading session. Hughes stated, "We noticed a robust defense," and added, "It was presumably by a market-maker."

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The return on bitcoin in 2023 has decreased to 35%, which is still significantly higher than the 4% return on global stocks. The crypto market had a $1.5 trillion collapse last year as a result of tightening monetary policy and a slew of catastrophes that exposed significant counterparty risk.