Bitcoin plunges under $20,000 to its lowest point in 2 months as Silvergate blow-up and bank fears rattle risk assets
- Bitcoin on Friday dropped below $20,000 for the first time in two months.
- The crypto industry is navigating through fresh pain as Silvergate Bank prepares to wind down.
Bitcoin slumped to its lowest price in two months Friday as the collapse of crypto depositor Silvergate Bank and the blow-up of tech startup lender Silicon Valley Bank fueled a retreat by investors from so-called risk assets.
Bitcoin was down almost 8% Friday morning and fell below $20,000 for the first time since mid-January. At its weakest point in the session, the digital coin hit $19,594, the lowest price since January 13. Ether token also fell, down more than 7% to trade around $1,415.80
Bitcoin was veering toward a weekly loss of 10% in the face of the pending closure of Silvergate Bank, one of just a handful of US banks that accepted crypto deposits. Silvergate Capital said Wednesday it would start an "orderly wind down" and voluntary liquidation of Silvergate Bank in light of industry and regulatory developments.
Customers pulled at least $8 billion from the bank since crypto exchange FTX failed in November. Meanwhile, a drop in crypto prices as the Federal Reserve kicked up interest rates to tame hot inflation also Silvergate.
"[We] see investors and traders pulling their money, and the institutions have little to no mechanism to stop that. The adverse effect of this event negatively influences the price of bitcoin," Naeem Aslam, chief investment officer at Zaye Capital Markets, wrote in a Friday note.
"But we are still surprised that the price of bitcoin hasn't fallen as sharply as many had expected, especially [as] Silvergate was one of the most important banks for crypto operations."
Risk appetite was also hit Friday by a plunge in shares of Silicon Valley Bank. The stock sank more than 60%, extending a Thursday selloff on contagion worries in the banking industry.
A key lender to technology startups, Silicon Valley Bank this week said the climb in interest rates spurred billions in losses on a $21 billion bond portfolio. CNBC reported on Friday the company is in talks to sell itself after attempts to raise capital fell short.
The KBW Nasdaq Bank Index fell more than 2% on Friday. A selloff in bank stocks Thursday wiped out a combined $55 billion of market value in JPMorgan Chase, Bank of America, Wells Fargo and Morgan Stanley, four of the largest banks in the US.
Morgan Stanley, BofA and Wells Fargo shares were lower during Friday's session while JPMorgan stock edged up.
- Minority shareholders must grin and bear it when promoters wash dirty laundry in public
- 10 Superfoods to soothe acid reflux and heartburn naturally
- Window to address climate change closing rapidly: IUCN seven Commissions ahead of COP28
- Salman Khan receives threat again; his security reviewed
- BCCI extends contracts of Rahul Dravid and his support staff