Crypto-focused bank Silvergate Capital (NYSE: SI) has sent shockwaves all across the cryptocurrency markets. The bank has delayed its filing with the U.S. Securities and Exchange Commission (SEC) as it faces a ‘crisis of confidence‘.
This development has triggered major selling pressure in the crypto market. In the last few hours, Bitcoin and the broader crypto market have tanked over 5% eroding more than $50 billion of investors’ wealth.
As of press time, the Bitcoin (BTC) price is down by 4.9% and is currently trading at $22,335 with a market cap of $431 billion. On the other hand, the altcoins are facing an even sharper correction.
Ethereum (ETJ) is down over 5% currently trading at $1564 levels. Other popular altcoins like Polygon (MATIC), Cardano (ADA), Dogecoin (DOGE), Polkadot (DOT), and Solana (SOL) have corrected anywhere between 5-10%.
With the recent move, Bitcoin and the broader crypto market have shown a kind of decoupling from the US equity market. On Thursday, March 2, the Nasdaq Composite (INDEXNASDAQ: .IXIC) ended 0.73% in the green.
Many in the cryptosphere fear the ability of Silvergate Bank to survive going ahead. Some have been also speculating whether Silvergate will take the route of crypto exchange FTX.
Crypto Firms Distance Themselves From Silvergate Bank
The developments at Silvergate Capital have triggered a quick reaction from its partners in the crypto space. On Thursday, crypto exchange Coinbase dropped Silvergate as its USD banking partner while choosing its rival Signature Bank.
One of the largest corporate Bitcoin holders MicroStrategy announced that it has no deposits with Silvergate bank. In a message on Twitter, Microstrategy noted:
We have a loan from Silvergate not due until Q1 ‘25. There are mkt concerns re SI’s fin. condition. For anyone wondering, the loan wouldn’t accelerate b/c of SI insolvency or bankruptcy. Our BTC collateral isn’t custodied w/ SI & we have no other financial relationship w/ SI.
On Thursday, March 2, the stock price of Silvergate Capital (NYSE: SI) tanked by a staggering 57% in a single day. The bank’s stock is now down by more than 95% on the yearly chart. Amid the delayed SEC filing and doubts of insolvency, banking giant JPMorgan has downgraded the Silvergate stock to “underweight” from “neutral”.