Was Silvergate Bank Blamed for Crypto Market Drop? : What’s Next, Worst $17k or Best $28k
Next Move For BTC $17k or $28k? | USDC | BTC | Whales | Manipulation
Yesterday, there was a short sudden crash in the cryptocurrency market. Perhaps the most important question is why this sudden crash occurred and what will happen next in the cryptocurrency market.
A bank called Silvergate was founded in California in 1988. Wealth management, Digital currency banking, residential loans, Commercial banking, and treasury management are some examples of the services offered by these banks.
This is not your regular bank; rather, it is a crypto-friendly bank.
Service
If any institutional investors, corporate clients, reputable crypto projects, or exchanges required money, this bank would lend it to them. To borrow money, the company had to use its crypto assets as collateral.
Money is required for marketing and new development in order to pursue innovation in crypto projects. We all know that banks do not lend money to crypto-related enterprises because the risk is too high, and it is also against bank policy. Just a few banks have this authority, and they are mostly private banks.
Silvergate Bank was a bridge to bring bank money into crypto and send crypto back to the bank.
-$1 billion
The news regarding Silvergate Bank is that this bank was involved in the FTX crash and has a $1 billion liability. The bank’s status is poor as a result of the incident, and rumors spread that it may go bankrupt.
If Silvergate Bank goes bankrupt, it will be another cryptocurrency market bankruptcy, following in the footsteps of Three Arrows Capital, Luna, Celsius, FTX, and Voyager.
SEC
Silvergate Bank submitted the report to the US SEC (Securities and Exchange Commission), resulting in a 36% gap down and a 57% drop in the shares that day.
FTX
One thing to note about the Silvergate Bank stock is that it began to fall as soon as reports that something was amiss with FTX started to appear. Since August, this SI (Silvergate) stock has been steadily declining.
Before August, SI stock was performing exceptionally well and was trading at approximately $110. It is now trading at $5.72. This has also joined the Altcoin family.
The charts of bitcoin and SI stock indicate that these banks were heavily involved in crypto lending. SI stock has been decreasing since bitcoin began to plummet. Both graphs are highly correlated with one another.
Due to SI’s stock’s sudden fall, we are forced to conclude that there is a strong likelihood that it will bankrupt. The crypto market is where this bank’s activities are being observed.
Partnerships
There are various cryptocurrency projects that Silvergate Bank has partnered with. But, all of the projects now refuse to work with Silvergate Bank.
Who cut the ties with Silvergate bank:
- This includes Coinbase Exchange
- FTX is already bankrupt
- PAXOS
- Circle is part of the Digital Currency Group, under which USDC Stablecoin comes
- Crypto.com Exchange
- Bitstamp
- Blockchain.com
- Gemini
They have all announced their exit from Silvergate Bank.
Sinking Ship
The only choice is for them to cut ties with Silvergate since if anyone boards a ship that is sinking, they would all drown together. In order to prevent any negative effects on the other participants, Silvergate Bank must likewise quit.
Michael Saylor
The news about MicroStrategy was that they had 130k bitcoins. Part of this bitcoin should be in Silvergate’s possession because they used to acquire bitcoin using a bank loan.
On this MicroStrategy, responded on Twitter that none of our reserves are in Silvergate Bank’s control; all reserves are with us. Yes, Microstrategy obtained a loan from Silvergate Bank, but it is due in the first quarter of 2025. They said that they would pay back the loan without a doubt.
Tether
Tether’s Chief Technology Officer Paolo Ardoino stated that if Silvergate Bank fails, Tether (USDT) would not suffer any losses.
A massive red candle was spotted in the price of bitcoin within 1 hour, despite all of the big news in the market.
Manipulation
Around 220 million trades have been liquidated. There have been many bitcoin sales on Binance and Bybit exchanges. 58000 BTC has been sold in Binance and 17000 BTC has been sold in Bybit. Most of the money that came out of USDC was +200 million. Whales have not yet withdrawn the money from the exchange. These sharp-falling whales have done it intentionally. It is possible that whales will start buying again.
Several analysts claim that this game was created to liquidate everyone’s long position. Others claim that MT GOX has released Bitcoin on the market for sale.
To improve the condition of the US economy, the Fed will continue to raise interest rates in order to manage inflation. The FOMC will meet on March 15–16, and it is expected to raise rates by 100 basis points this time because inflation has declined by only 0.1. As a result, the crypto market will remain under pressure.
Good News
→ In the midst of all of this, the market has got some good news.
International traders exchange goods and services with one another, and in order to do so they get letters of credit from the bank. Through this letter of credit, which had a value of 100 million yuan, Russia’s bank joined forces with China. For this international settlement, the Masterchain blockchain was used. Letters of Credit are being created on the blockchain, which is great since there will be no fraud and no one will be able to modify them.
Bitcoin
When the price of bitcoin was around $25000, I mentioned in an article that I would not buy until the price will not reach $25200. Bitcoin is moving in an upward parallel range.
The upper line of this upward parallel range has been formed at $25500, while its lower important zone is at $21800. This has resulted in the formation of a head and shoulder pattern.
If the bottom side of bitcoin breaks, it might fall to the level of $19200, according to the head and shoulders pattern. The support level of $17600 can be breached if there is continuous strong selling pressure.
Upside
Now let’s see the upside viewpoint. If the price of bitcoin does not breach the level of $21800 and the upward rally continues, a breakout of the upward parallel range is possible. According to the head and shoulder pattern, it may reach a maximum of $27000. If the purchasing pressure continues, it might reach $28000-$29000.
Friends, I hope you understand my point of view. If you like the article, please clap, and if you have any questions, please leave a comment.
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Disclaimer
This is not Financial Advice. This article is meant only for educational purposes. I am just sharing my thoughts and analysis based on my many years of experience.