Bitcoin Volumes Drop Amid Silvergate Uncertainty

GB Market Commentary 06/03/2023

by Marcus Sotiriou

Bitcoin hovers around $22,400, as investor sentiment continues to be bearish amongst Silvergate panic.

Negative investor sentiment is backed up by data from digital asset platform Coinshares showing that digital asset investment products saw minor outflows totalling $17 million last week, which was the fourth consecutive week of outflows. This lack of volume within Coinshare’s digital asset platform is further shown when looking at the entire Bitcoin market volume, which averaged $57 billion – 15% lower than normal.

Coinshare’s Short-Bitcoin product saw inflows for a third week totalling $1.8 million. The disinterest from institutional players in the market at the moment is likely due to the regulatory concerns in the US over the past few weeks, in addition to the more immediate concern of Silvergate Bank.

This has stemmed from SIlvergate’s to FTX and Alameda, leading to Silvergate’s stock price dropping by 95% over the past six months. The bank announced that it was poorly capitalised on Friday and failed to file its annual report by its deadline, leading to Moody’s downgrading the company's long-term issuer rating. Shortly after this rating downgrade, Silvergate disclosed it was closing its 24-hour money transfer system - the Silvergate Exchange Network. I would be surprised to see if the bank is open in a month with recent developments.

The collapse of Silvergate could have ramifications for digital asset platforms who have used them, but also for how other banking partners decide to integrate crypto firms.

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