Bitcoin hits an eight-week low as prices fall more than nine percent on the morning of this Friday to nineteen thousand seven hundred dollars. Since last Tuesday, Bitcoin has fallen more than fifty-two million dollars in market price.
Senior Market Analyst, Edward Moya, reported that the market continues to remain rough for cryptocurrency. This situation is due to devastating events such as the bankruptcy of Silvergate bank, the planned release of the February united states job report, and the unremitting market regulation pressures.
Similarly, Ethereum has hit an all-time eight-week low. Such is the situation after Ethereum market prices increased by ten percent in the same day period. Its market prices have fallen by over one thousand four hundred dollars a coin.
Coinmarketcap reported that the cryptocurrency market has fallen by more than eight percent since Friday morning. This drop is an equivalent of a price fall from nine hundred and ninety-four trillion dollars to nine hundred and fourteen trillion dollars.
Effect of Liquidation of Silvergate Capital
The crypto asset class’s access to dollars is in question as investors and businesses try to understand the implications of the possible liquidation of Silvergate Capital, a critical banking partner in the United States.
Last Friday, Silvergate suspended its payment network that enabled customers to exchange crypto and dollars between accounts at all hours of the day, aligning with the crypto market’s liquidity requirements.
Kaiko analyst Conor Ryder suggested that growing banks such as Customers and Path ward, formerly MetaBank, should wait to take a step to replace the fallen banks. Instead, he suggested that banks not backed by the dollar are suitable replacements, such as Stablecoins and The Euro.
Because Signature Bank, the other most accommodating bank for crypto companies, is actively decreasing its exposure to the digital asset business.
On Thursday, the crypto markets experienced pressure due to emerging financial strains in the banking sector, coupled with fresh challenges following the news about Silicon Valley Bank, which caused a sixty percent drop in the shares of its parent company.
Biden’s Proposal for Closing the Tax Loophole
The Biden Administration has proposed to generate twenty-four billion dollars for the United States government by eliminating a tax loophole. This loophole allows investors to leverage cryptocurrency losses to offset their capital gains and personal income.
Coinbase’s chief legal officer, who reported to the House of Financial Services Committee this Thursday, announced that the U.S. should strive to regulate crypto like other countries.
As the largest cryptocurrency firm in the United States, Coinbase has the advantage of having numerous banking partners and is not as vulnerable as smaller startups to the possible liquidation of Silvergate, with whom it terminated its business dealings last week.
In another report on Thursday, analyst David Holt cautioned that while Coinbase has limited direct exposure to Silvergate, any indirect effects resulting from the financial health of similar clients and investor sentiment, such as trading activity, may weigh on Coinbase’s actual performance.
The trading price of Coinbase’s shares experienced a significant decline of more than seven percent on Thursday, bringing their value down to fifty-eight dollars. This drop in value is attributed to the concerns surrounding Silvergate Capital’s potential liquidation and its impact on the access to dollars for the crypto asset class.
The negative sentiment among investors continued into Friday’s pre-market session, with Coinbase’s shares trading over one percent lower than their previous closing price. This trend indicates that the impact of Silvergate’s situation on Coinbase’s stock performance may persist in the short term, pending further developments.