Silvergate fears it will wipe out bullish crypto traders, sending the bitcoin price tumbling.

Fears over Silvergate Capital caused Bitcoin and other cryptocurrencies to decline on Friday. The suffering of the banker who specialized in cryptocurrencies ran the danger of negatively affecting market functioning and the regulatory image.

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During the last day, Bitcoin's value has dropped 4% to around $22,350, moving below the $23,000 mark that the biggest digital currency has been holding above for days. Bitcoin was trading at its lowest level since early February, sitting at more than $22,000.

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The next stop for Bitcoin, if it can't hold $22,000, will likely be around $21,400, where its February low and November high are converging, according to Yuya Hasegawa, an analyst at cryptocurrency exchange Bitbank.

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Concerns concerning issues at Silvergate (ticker: SI) are now engulfing businesspeople. A federally insured bank, Silvergate noted in filings late Wednesday that securities sales during a bank run may leave it "lower than well-capitalized." The group also noted that it was "within the process of re-evaluating its services and methods." Silvergate, a key middleman in the institutional crypto market and influential banker to digital asset companies, noted that it was evaluating its ability to continue as a going concern.

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The first impact on cryptocurrency prices was minimal: from late Wednesday and into Thursday, Bitcoin progressively declined from about $23,500 to below $23,300 before prices fell to roughly $22,000 early Friday. Prices dropped precipitously as Bitcoin plummeted below $23,300, driven by losses in the cryptocurrency derivatives market, where Bitcoin futures represent arguably the most liquid market in all of the digital property.

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Positions in Bitcoin futures can be taken on margin, which is money borrowed from a dealer, and can be exhausted in a matter of seconds if the value of the collateral—typically Bitcoin itself—falls below the needed threshold. According to statistics from CoinGlass, around 80,000 merchants had their crypto futures contracts liquidated in the previous 24 hours, wiping out $240 million across all cryptocurrency futures, not just Bitcoin.

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For the short-term view, the decline has pushed the price below its 50-day moving average, according to Alex Kuptsikevich, an analyst at FxPro.

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These crypto-specific issues are likely to dominate market sentiment in the near future, transcending the stock market's correlation with Bitcoin trade, which always aligns it with the Dow Jones Industrial Average and S&P 500.

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Yet, companies would do well to control the equity markets, where investors are still concerned about factors like inflation and interest rates that are more likely to have a long-term impact on public perception of cryptocurrencies.

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A major concern surrounding Silvergate is that problems with the banking institution might have an impact on the liquidity of the cryptocurrency markets. If the company stops facilitating transactions between exchanges and market makers, who handle the majority of the trading in Bitcoin, it might worsen liquidity problems that have already existed for months, making cryptocurrency more unstable.

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With several exchanges and buying and selling firms already saying that they are ceasing operations using Silvergate's platform, that trend may already be in motion, although it is probably not disastrous, according to one market player.

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Silvergate shouldn't be FTX, which is fortunate. Instead of being a crucial source of liquidity and quantity for the whole crypto ecosystem, Silvergate is more of a fiat on/off ramp for U.S. "dollars," according to Michael Safai, managing associate at cryptocurrency trading firm Dexterity Capital. "In the worst-case scenario, trust will be somewhat undermined, which may prompt some corporations to hastily withdraw some funds from the market."

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Further regulatory considerations are required, particularly in light of the legal storm clouds that have formed over the industry since FTX's collapse in November. The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller issued a warning to banks about the dangers of accepting deposits from cryptocurrency businesses in late February. According to Silvergate, it was "analyzing certain regulatory and other pending inquiries and probes."

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The Operator of an algorithmic trading platform called CoinRoutes, Dave Weisberger, warned that Silvergate's problems might seriously disrupt the cryptocurrency market in the immediate future. "In the long term, the legal and regulatory issues pertaining to the cryptocurrency sector will go forward."

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The second-largest cryptocurrency behind Bitcoin, Ether, dropped 4% to $1,565. Smaller cryptocurrencies or altcoins have also been solidly in the red, with

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Each Cardano and Polygon fell by 4%. Shiba Inu and Dogecoin suffered even greater losses, falling 6% and 5%, respectively, on Memecoins.