A recap of last week’s banking contagion and bitcoin
The biggest news over the past week has been the collapse of the banking sector, particularly crypto-friendly banks. On March 2, Silvergate raised concerns about its solvency and ability to continue operations in its own SEC filing. This, in my opinion, was undeniably the result of direct and/or indirect exposure to the ongoing contagion within the crypto industry caused by the collapse of Luna, 3AC and FTX. As expected, a bank run by Silvergate partners to distance themselves and withdraw assets followed.
Silvergate ($SI) shares immediately fell over 50% amid reports of customers moving elsewhere.
“It is now becoming increasingly difficult for crypto companies to establish or maintain relationships with a US bank,” said Ivan Kachkovski, FX and crypto strategist at UBS.
Speculation abounded as to how a Silvergate dissolution would affect stablecoins and other crypto-servicing banks. Silvergate was the main issuer of the second most popular stable coin USDC.
</figure><p>Die Ansteckungsbedenken verlagerten sich dann auf die Signature Bank, die andere beliebte Crypto-Service-Bank.
“Signature noted that since February 1, it had stated that it would no longer support any of its crypto exchange clients buying and selling amounts less than $100,000. Signature said in December that it would reduce, but not completely eliminate, its exposure to the crypto sector.”
On March 8, Silvergate officially announced in a press release that they were winding up their businesses and liquidating assets.
The official collapse of Silvergate meant more widespread contagion and heightened uncertainty and anxiety among bank customers and USDC users. On March 9th and 10th, the Silicon Valley Bank suffered a classic bank run. Billions of dollars in withdrawals were piling up from the fractional reserve bank, many withdrawals from its core clientele, startup companies.
SVB stock plummeted 60% and by the end of the day, regulators had shut down the bank and turned over the assets to the FDIC. The liquidation of the SVB was the second largest bank failure in US history.
Confidence in banks deteriorated rapidly as most listed companies collapsed.
Source: Crypto News Deutsch