Silvergate Bank Crisis Sees Crypto Market Tank
Silvergate Bank crisis sees crypto market tanking
Silvergate Bank, one of the leading institutions for innovative businesses in the cryptocurrency and financial technology (Fintech) industry, has seen its market value plunge by 60% in March, data from Yahoo Finance showed.
Due to the bank’s standing as a key player in the on-and off-ramping of the cryptocurrency space, seeing its stock 'SI' trade in red has led to a huge sell-off in the cryptocurrency market.
Overall, approximately $70 billion has been wiped off the total market capitalization of the entire decentralized finance sector, with current metrics at around $984 billion after the industry soared above the $1 trillion mark on the opening day of March.
While Bitcoin and Ethereum (ETH) always lead gains and losses, altcoins such as Klaytn (KLAY), Theta Network (THETA), Basic Attention Token (BAT), Zilliqa (ZIL), Optimism (OP), Lido DAO (LDO), Flow (FLOW), and the Sandbox (SAND) have seen double percentage losses in the past week.
Silvergate Bank's stock price went down after the SEC filing disappointment
On Wednesday, 1 March, the financial institution disclosed in a US Securities and Exchange Commission (SEC) filing that its annual 10-K report will not be submitted in time.
The 10-K is an annual report filed by publicly-traded companies about their financial performance within a 365-day period. It covers the organization's history, structure, executive compensation, financial statements, and earnings per share (EPS).
Not being able to fulfil this requirement raised eyebrows among the company's various stakeholders after the firm said it would be examining its ability to continue operating. In addition, the bank said it is re-evaluating its business strategies under the regulatory and business challenges it faces.
Many crypto firms are moving away from the bank
In light of the company's stock price decrease, cryptocurrencyy heavyweights such as Galaxy Digital and Coinbase Global announced on Thursday, 2 March, that they have dropped Silvergate as their banking partner.
Aside from these powerhouses in the crypto economy, the European cryptocurrency exchange Bitstamp, CBOE’s digital asset exchange, and stablecoin issuers Circle and Paxos have also discontinued their partnerships with the financial institution.
Despite the crypto market being down by $70 billion in March, the entire industry has been on a rebound in 2023 with a spike of 30% year-to-date (YTD) from about $756 billion on 1 January to more than $980 billion on 6 March.
Author: Raphael Minter
Raphael Minter/ Albert Zuhnden (preferred pen name) is a crypto finance writer, data miner, and fundamental analyst. Raphael has written hundreds of articles about centralized and decentralized financial instruments such as precious metals, commodities, stocks, and cryptocurrencies. He broke into digital finance in 2016 and believes digital assets and blockchain technology is the future of finance.