Bitcoin fell to its lowest level in nearly two weeks, part of a broader retreat in crypto markets as investors digested the unraveling of a key industry payments network.
The largest token by market value plunged as much as 6% before paring some of the slide to finish down 4.9% at $22,323 by 1:44pm on Friday. New York. Smaller coins such as Ether, Avalanche and the meme token Dogecoin also experienced declines.
The digital asset industry is absorbing the fallout from troubles at crypto-friendly US bank Silvergate Capital Corp, which has said it is 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 no longer accept or initiate payments through Silvergate.
“Silvergate is one of the main ones. US Dollar Banking providers to 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 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 faced difficulties on deposits last year due to the bankruptcy of FTX, a key client.
The digital asset sector is also battling a broader regulatory clampdown in the US, as well as expectations that interest rates will stay high longer to fight inflation, dampening risk appetite.
Bitcoin’s turmoil brought some important technical levels into focus. The token has fallen below its 50-day moving average, raising the risk of further downside for some chart analysts.
Crypto investors often turn some of their eyes to Tether, the largest stablecoin, during times of market stress. The token aims for a permanent value of $1 and is widely used to facilitate digital asset trading, but it has long faced questions about the makeup of the reserves holding down its peg.
Paolo Arduino, Tether’s chief technology officer, said on Twitter that the stablecoin has no connection to Silvergate.
Hayden Hughes, co-founder of social trading platform Alpha Impact, said he detected Tether’s “heavy buying” in a five-minute span during Friday morning’s trading session in Asia. “We saw a strong defense,” Hughes said, adding that it was “probably from a market maker.”
Bitcoin’s rebound has cooled to 35% in 2023, still above the 4% return from global stocks. Crypto markets suffered losses of $1.5 trillion last year amid a series of tightening monetary policy and exposure to high counterparty risk.
tech.hindustantimes.com
