Bitcoin has dropped to its lowest level in two weeks amid the troubles at crypto-friendly US bank Silvergate Capital Corp. The flagship cryptocurrency dropped by more than 6% to $21,971 before slightly covering some lost ground.
Silvergate which is one of the main US dollar banking providers for the crypto industry is reported to be having liquidity issues. A development that is viewed as negative for the crypto industry.
Investors King understands that this created a panic in the market and a subsequent dropdown of both Bitcoin and most altcoins. At the time of writing this report, Bitcoin is exchanging hands at $22,350 after dropping below the $22,000 mark.
Meanwhile, reports also have it that a vast majority of crypto-friendly Silvergate Bank’s (SI) industry clients have left or are leaving the company. Thereby, compounding the woes of the company.
Investors King learnt that Coinbase, Paxos, Gemini Galaxy Digital and BitStamp are some of the notable companies using Silvergate Bank. Similarly, the bank’s share price has fallen by more than 50%, to an all-time low, on the day’s trading.
In a memo on Thursday, Coinbase, the largest cryptocurrency exchange in the U.S. in terms of trading volume announced it is halting payments to and from Silvergate bank.
Coinbase’s decision comes just a day after Silvergate Capital Corporation, the parent company of Silvergate Bank, delayed its annual 10-K report, saying that further unreported losses could mean the bank is “less than well capitalized.”
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.
Silvergate already reported a $1 billion loss in the previous quarter as it was forced to sell assets at fire-sale prices to remain liquid and minimize the consequences of a bank run sparked by the FTX collapse.