Bitcoin Drops 5% in One Hour, Reaches 2-Week Low Alongside Silvergate Capital Corp
The price of Bitcoin suddenly fell by 5% within a one-hour period, hitting a two-week low, according to data from CoinMarketCap. The drop happened in conjunction with Silvergate Capital Corp (NYSE: SI), a bank holding company specializing in digital currencies
Silvergate Bank’s stock price plummeted over 50% as clients in the crypto industry withdraw their funds from the bank. This comes after recent controversies surrounding the bank’s involvement with a defunct cryptocurrency exchange.
The bank has already reported a $1 billion loss in the fourth quarter of 2022, which wiped out almost a decade’s worth of profit. The bank was forced to sell assets at low prices to stay afloat and avoid a bank run triggered by the collapse of FTX in November. In January, Silvergate announced that it would sell an additional $1.7 billion in assets to repay a loan from the Federal Home Loan Bank of San Francisco. However, its recent filing indicates that this was not enough. The bank’s independent registered public accounting firm needs more time to complete certain audit procedures, which will delay the 10-K filing. The crisis has the potential to impact cryptocurrency prices, as the bank facilitates transfers between exchanges and market makers who do a lot of the trading in Bitcoin.
Cryptocurrency exchanges Coinbase and Galaxy Digital have both recently ended their relationships with Silvergate Bank, citing concerns about the bank’s long-term viability. The move comes after Silvergate issued a warning to investors that it may not be able to continue as a going concern. The bank has been a popular choice for cryptocurrency companies due to its focus on digital asset banking. However, the recent drop in its stock price and the departure of high-profile clients has raised concerns about the bank’s future prospects.
Why is Silvergate capital going down?
As a publicly traded company, the value of Silvergate Capital’s stock can fluctuate due to various factors, including market conditions, company performance, and news events. Silvergate’s shares plummet over 50% due to the departure of cryptocurrency clients from the struggling bank. The crypto-friendly bank, which provides financial services to businesses involved in cryptocurrencies, saw a sharp drop in its stock value, signaling concerns about the bank’s financial health. Despite the recent growth in the cryptocurrency industry, Silvergate’s financial troubles have led to an alarming decline in its share prices. The bank’s reputation has also been tarnished as the crypto community begins to question the safety and stability of Silvergate’s operations.
What is Silvergate crypto?
Silvergate is a financial institution that primarily serves the digital currency industry. The company offers banking services to clients in the digital currency industry, including cryptocurrency exchanges, miners, and institutional investors.
Is Silvergate Bank a real bank?
Yes, Silvergate Bank is a real bank that is publicly traded on the New York Stock Exchange (NYSE). It was founded in 1988 and has its headquarters in La Jolla, California.
Silvergate Capital Corp is the holding company for Silvergate Bank. It was founded in 2014 and is headquartered in La Jolla, California. The company went public in 2019 and is listed on the New York Stock Exchange under the ticker symbol SI.
Is Silvergate Bank safe?
Like any bank, Silvergate Bank is subject to regulatory oversight to ensure that it meets the required safety and soundness standards. As a publicly traded bank, it also undergoes regular audits and disclosures. However, as with any investment or financial institution, there is always some level of risk involved.
Silvergate said it is examining its ability to continue as a going concern, and is “in the process of re-evaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.” This is an existential crisis for the bank, shares in which had already collapsed 90% over the past year amid cascading crypto prices, regulatory scrutiny, and a string of bankruptcies across the digital asset industry.
The lender was pushed to sell more assets than anticipated in January and February, a move expected to usher in losses that will negatively impact Silvergate’s capital ratio and could result in it being “less than well-capitalized,” the company revealed.
The recent drop in Bitcoin’s price and Silvergate’s stock is a reminder of the volatility and risks associated with investing in the crypto market. Investors should exercise caution and do their own research before making any investment decisions. However, the long-term potential of Bitcoin and the crypto industry as a whole cannot be ignored.