A worsening macroeconomic climate and the collapse of industry giants like FTX and Terra have weighed on bitcoin’s price this year.
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Cryptocurrency prices fell on Friday as investors weighed the latest financial woes at Silvergate Capital and assessed what a potential bankruptcy at the crypto bank could mean for the broader crypto industry.
Bitcoin was last lower by more than 4% at $22,364.21, according to Coin Metrics. Ether fell about 5% to $1,565.58.
Bitcoin, YTD
The drop came two days after Silvergate, which has become the go-to bank for cryptocurrency businesses, said it won’t meet an extended deadline to file its annual report and warned it may not be able to operate another 12 months. On Thursday, several crypto companies said they’ve stopped accepting or initiating payments to or from Silvergate – including Coinbase, Galaxy Digital, Circle, Paxos, Bitstamp.
“The bearish turn could certainly be a delayed reaction to Silvergate’s ongoing issues,” said Clara Medalie director of research at Kaiko. “Many large exchanges and market makers partner with Silvergate for fast transactions between entities, and any halt inactivity could have an impact on global crypto liquidity.”
Bitcoin and ether prices remained flat throughout Thursday, while shares of Silvergate dropped 57%.
“To start 2023, crypto markets enjoyed a solid rally to six-month highs following a slowdown in FTX-related contagion, but the Silvergate news has renewed concerns around liquidity and risk,” Medalie added.
Bitcoin has recovered this year after tumbling more than 60% in 2022 amid the pullback in risk assets and the implosion of FTX. Even after the recent decline, bitcoin is up more than 30% this year to trade above $22,000. It ended 2022 below $17,000.
