The crypto market saw a sharp decline at 12 am UTC on March 3. The price of Bitcoin (BTC) fell by over 5% from around $23418 to $22163, according to CryptoSlate data. Most of the drop occurred within an hour as the BTC price fell by over $1,000 in seconds.
The price of the second-largest cryptocurrency followed suit with a 5.4% decline from around $1,643 to $1,554 around the same time.
Many other cryptocurrencies also suffered losses as Dogecoin (DOGE) slipped 5.8% over the past 24 hours, while Cardano (ADA) and XRP (XRP) are down 3.78% and 2.73%, respectively.
The fall in crypto prices triggered liquidations that crossed $251 million over the past 24 hours, most of which were triggered after the sharp dips in prices, according to Coinglass data.
Binance saw the most liquidations, around $90 million over the past 24 hours, the data indicates. OKX followed at a close second with $75.83 million of liquidations over the past day.
Over $222 million worth of long positions were liquidated, while short positions made up a little over 8% of the total liquidations over the past 24 hours, Coinglass data shows.
Total Ethereum (ETH) positions liquidated over the past day stood at $49.24 million. BTC liquidations stood at $84.06 million, according to Coinglass.
What caused the dip
Crypto bank Silvergate is owned by Silvergate Capital Corporation, whose share price dropped 49% upon the announcement that it will delay its annual report to the Securities and Exchange Commission. The firm said it needed more time to complete its audit.
Silvergate bank said that it may file for bankruptcy owing to a massive sell-off. It is also unable to repay its debts. Many firms, including Coinbase, Circle, and Paxos severed all ties with the troubled bank.
Regarding the crypto market, Sora Ventures CEO Jason Fang told CryptoSlate:
Obviously there’s the current fud surrounding Silvergate and Binance, and we think that the market isn’t in a clear bull yet, but there are some certain sectors that outperform everytime the market dumps, it could be sectors surrounding L2, LSDs, zk rollups, etc. Since the narrative is different every time, we think keeping an eye on the market during these drops is definitely worth it, and its a good metric to observe which sectors the smart money is betting on.
Alex Kuptsikevich, FxPro senior market analyst, believes the crypto market tumbled in reaction to Silvergate’s uncertain future. He told CryptoSlate:
“The plunge into this area came as a market reaction to the potential bankruptcy of Silvergate. The news triggered a wave of stop orders on fears that the situation could cause a domino effect in the industry.”
Kuptsikevich said that the dip pushed Bitcoin’s price below its 50-day moving average, “which does not bode well for the short-term outlook, although this signal will only be reliable at the close of the day.”
He added that the market sentiment is “moderately positive” and supports the “buy-the-dip” mood. Many Twitter users claimed to have bought Bitcoin and taken advantage of the price fall.
But many investors panicked and, per Kuptsikevich, were scared that the Silvergate crisis could soon escalate to the FTX level.
In response to the latest events, investor Anndy Lian told CryptoSlate:
“Silvergate Bank’s share price has fallen by more than 50% to an all-time low after it announced it would review its books with auditors and warned of several headwinds. A vast majority of the bank’s crypto-friendly industry clients have left or are leaving the company, including Coinbase, Circle, Paxos, Crypto.com, Galaxy, and Gemini which have all suspended business with the bank. The bank’s clients leaving was reported to have happened less than a day after the announcement of the audit review.
This means that it is now harder for crypto companies to sustain relationships with a U.S. bank. Many institutional clients will not be able to transact big amount of crypto until they find better safer solutions to work around. As we speak, I know some of my friends are moving their funds out of some banks in Puerto Rico.
There will be a big vacuum in the short term. I know many of the crypto organisations are now looking for offshore solutions and the more adventurous ones are shifting to Asia to run their trading desks.”
Many analysts claim the recent dip is a signal for the BTC price to keep going down, but others are more optimistic. Quantum Economics CEO Mati Greenspan told CryptoSlate:
“Including yesterday’s sudden dip, Bitcoin and crypto are having one of their strongest years ever. No major support lines have been broken and the long term chats look bullish as ever.”