Bitcoin sinks to two-week low as Silvergate fallout hurts crypto

BLOOMBERG

Bitcoin dropped to the lowest level in about two weeks, part of a wider retreat in crypto markets as investors digested the unraveling of a key industry payments network.
The largest token by market value sank as much as 6% before paring some of the slide to trade 4.6% lower at $22,347 in New York. Smaller coins such as Ether, Avalanche and the meme token Dogecoin also suffered declines.
The digital-asset industry is absorbing the fallout of the troubles at crypto-friendly US bank Silvergate Capital Corp, which has said that it’s reviewing whether it can remain viable. The bank offers a widely used payments network that facilitates the real-time transfer of funds between crypto firms. But many digital-asset exchanges, stablecoin issuers and trading desks are no longer accepting or initiating payments through Silvergate.
“Silvergate is one of the main US dollar banking providers for the crypto industry,” said John Toro, head of trading at digital-asset exchange Independent Reserve. “Any liquidity concerns will have a direct impact on market conditions and may affect the access and availability of some client funds.”
Silvergate’s woes are the latest example of the contagion caused by the collapse of the FTX crypto exchange in November. The bank suffered a run on deposits last year in the wake of the bankruptcy of FTX, which was a key client.
The digital-asset sector is also contending with a broader regulatory clampdown in the US as well as expectations that interest rates will stay higher for longer to fight inflation, sapping risk appetite. Bitcoin’s tumble brought some key technical levels into focus.