The decision to close Silvergate, a bank that has been at the forefront of the industry's growth, led to a decline in cryptocurrency prices on Thursday. Particularly in the regionals and closely associated with the West Late on Wednesday, a few hours after Silvergate Capital declared it will cease operations and liquidate its cryptocurrency-friendly bank, a minor decline in price started.
According to Conor Ryder, research analyst at Kaiko, the very minor scale of the move suggests that cryptocurrency investors priced the news in last week when the company initially warned it may not be able to continue operating and it shut down the SEN, or Silvergate Exchange Network.
A plan to raise more than $2 billion in capital to assist cover losses on bond sales was disclosed by Silicon Valley Bank, whose clients are primarily tech companies, and this news caused shares of SVB Financial to plummet even further by Thursday afternoon. Although SVB claims to have little exposure to cryptocurrencies, some people have connected the two incidents because of the need for recapitalization after the Silvergate incident.
Despite a difficult macroeconomic environment and a declining correlation between cryptocurrencies and stocks, bitcoin and ether have held up reasonably well. Other setbacks for the space include the recent Silvergate developments and the post-FTX regulatory crackdown on the industry that started in February. Even their single-digit drops on Thursday pale in comparison to the 60% and 41% declines suffered by SVB and Silvergate, respectively.
Bitcoin's correlation with stocks is now lower than it was for the majority of 2022, and for the past several weeks, its volatility has been at or very close to historic lows.
The movement on Thursday brought bitcoin below the crucial technical barrier of $22,200. Despite the fact that some investors have welcomed bitcoin's recent sideways movement in light of a number of unfavorable industry developments, chart analysts have been waiting for the cryptocurrency to close above $25,000 in order to give more context to its year-to-date gains, which are currently around 30%.
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