• Silvergate Bank, a crypto-friendly bank, caused the market to quickly lose a good portion of their gains from January.
• Recent developments in the crypto space suggest that USD transfers have been deliberately cut off for some exchanges and platforms.
• This could cause prices of cryptocurrencies to go down further as well as reduce bullish sentiment among investors.
Silvergate Bank Causes Market Drop
Last week, news quickly circulated that Silvergate Bank, a crypto-friendly bank, was in hot water and had to stop offering USD services to its around 1,600 crypto customers. This obviously had a significant impact on the market as assets such as Bitcoin and Ethereum quickly lost a good portion of their gains from January. Even now, the market continues to feel the after-effects of the Silvergate announcement.
USD Drought Might Be Deliberate?
In a new report, Matrixport head of research Markus Thielen highlights recent developments in the crypto space when it comes to USD transfers. The first crypto platform to succumb was the Binance exchange which announced that it would no longer be able to handle USD transfers. Now, another exchange has followed suit with ByBit revealed that it will be pausing USD transfers on the platform from Mach 10. All of these could be linked to the Silvergate crisis which has no doubt affected the space tremendously but there is also evidence pointing towards this being an intentional move by cutting off access to USD for crypto companies.
Market Impact Could Be Significant
The potential impact of this deliberate move is already being felt by cryptocurrency markets with prices going down since then and trading volume for bitcoin dropping by 50%. For this reason, there could be more decline in prices to come according to Thielen’s report which points out less bullish sentiment among investors due to negative basis trading on futures markets for Bitcoin and Ethereum.
What Could Happen Next?
If these reports are accurate and intentional cuts have been made on access for US dollars then we might see further declines in prices across all major cryptocurrency coins as well as reduced confidence among investors who may become uncertain about investing in these digital assets due to decreased liquidity options available through US dollars or other traditional currencies.