The value of digital currencies slipped below $1 trillion on Thursday, following the decision of crypto-focused Silvergate CapitalSI
to close up shop after depositors and customers fled the company.
Crypto’s market value was $940.7 billion at 4 p.m. in New York, according to CoinMarketCap and $973.7 billion by CoinGecko’s tally, representing losses of about 7% from Wednesday evening. The market, which was as high as $1.1 trillion last month, approached $3 trillion in the autumn of 2021.
and ether, the two largest cryptocurrencies fell by like percentages, to $20,304 and $1,441, respectively.
On Wall Street, the Bitwise Crypto Industry Innovators ETF slid 7.8%.
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Silvergate, which is still trading after it announced it would wind down its business, fell to $2.80, 42% below its Wednesday close. News of its planned liquidation came after trading ended yesterday.
Signature Bank fell 12% to $90.76. The lender has a crypto business that it has been shrinking, and it attempted to distance itself from the industry.
“As a reminder, Signature Bank does not invest in, does not trade, does not hold, does not custody and does not lend against or make loans collateralized by digital assets,” CEO and co-founder Joseph DePaolo said in a statement.
The release added that 80% of Signature’s deposits are from “middle market businesses, such as law firms, accounting practices, healthcare companies, manufacturing companies and real estate management firms.”
Only $16.5 billion of its $89.17 billion of deposits are from digital asset-related clients, it said, and pointed to a dividend increase announced in January and stock buybacks this week as evidence of its financial health.
Signature’s step back from crypto along with Silvergate’s withdrawal reduce the industry’s bridges to traditional financial services and could stymie the growth of digital assets.
Silvergate closed its Silvergate Exchange Network last week, a key element in its attempt to provide a bridge between traditional banking services and the digital-assets industry. Without the service and following an exodus of large customers, it was unclear what market the Silvergate Bank operation would be able to serve.
Earlier, a run on deposits as pressure built on the crypto industry after the collapse of FTX last year led Silvergate to borrow $4.3 billion from the Federal Home Loan Bank of San Francisco, eventually raising objections on Capitol Hill.