The crypto market abruptly slid in the early hours of Friday, March 3rd, wiping out billions from the market in just one hour amid the growing FUD around crypto-friendly bank Silvergate capital.
According to the data presented by CoinMarketCap, in the early hours of March 3rd, the largest crypto asset Bitcoin [BTC] plunged from $23,450 levels to around $22,250 in just one hour, registering a 5% fall before stabilizing around $22,300. This wiped out about $22 billion from Bitcoin’s total market capitalization, which sits at around $432 billion at the time of writing.
At the same time, Ethereum [ETH] lost around $1,000 in value, from 1,650 levels to 1,550 levels. All other top 10 crypto assets also suffered similar sharp declines.
According to Coinglass’s data, over $200 million in crypto assets were liquidated as crypto prices teleported in a matter of minutes. As the prices fell, long positions on Bitcoin and Ethereum took the hardest hit. As of writing, data shows that $78.80 million in Bitcoin and $45 million in Ethereum have been liquidated in the last 12 hours.
The Silvergate FUD
An exact catalyst for this abrupt reversal has not yet been characterized, but many believe it is linked to the recent Silvergate Bank FUD around its delayed annual 10-K financial report filing. In a Wednesday filing with SEC, Silvergate Capital said that it was unable to file its annual report on form 10-K as it needed time to complete certain audit procedures to access the damages from the FTX blowout.
The filing reads:
“The Company sold additional debt securities in January and February 2023 and expects to record further losses related to the other-than-temporary impairment on the securities portfolio. These additional losses will negatively impact the regulatory capital ratios of the Company and the Company’s wholly owned subsidiary, Silvergate Bank (the “Bank”), and could result in the Company and the Bank being less than well-capitalized.”
This has sparked debate about the financial health of the bank. Following the announcement, Silvergate stock plunged 57.7% on Thursday, indicating a crypto thunderstorm.
Firms Cut Ties With Silvergate
Silvergate has ties as a lendee with many crypto giants. The looming thunderstorm has forced many firms to distance themselves from Silvergate. Yesterday, March 2nd, Coinbase tweeted that it would no longer accept payments to and from Silvergate.
Crypto.com, Gemini, Paxos, and Galaxy Digital followed Coinbase. More recently, USDC stablecoin issuer Circle Internet Financial has also announced the withdrawal of certain services involving the troubled Silvergate.
