After crypto-focused Silvergate Capital decided to shut down after losing customers and depositors, the value of digital currencies fell below $1 trillion on Thursday.
According to CoinMarketCap and CoinGecko, the market value of cryptocurrencies decreased by almost 7% as of 4 p.m. in New York, reaching $940.7 billion and $973.7 billion, respectively. The market, which this month reached a high of $1.1 trillion, will go close to $3 trillion by the fall of 2021.
The two biggest cryptocurrencies, bitcoin and ether, each fell by a similar proportion to $20,304 and $1,441, respectively.
Silvergate, which is still on the market despite having said it would shut down operations, dropped to $2.80, a 42% decrease from its Wednesday close. When yesterday’s trade had completed, word of its intended liquidation surfaced.
By 12%, Signature Bank dropped to $90.76. The lender made an effort to disassociate itself from the cryptocurrency market despite having a crypto company that has been declining.
As a reminder, Signature Bank does not invest in, trade, retain, custody, lend against, or make loans secured by digital assets, according to a statement from its CEO and co-founder Joseph DePaolo.
According to the press statement, middle market enterprises like law firms, accounting firms, healthcare providers, manufacturers, and real estate management companies account for 80% of Signature’s deposits.
Only $16.5 billion of its $89.17 billion in deposits come from clients who are involved with digital assets, the company claimed, and it cited a dividend hike that was announced in January and stock buybacks this week as proof of its financial stability.
The exit of Silvergate from the cryptocurrency market and Signature from it reduces the industry’s connections to traditional financial institutions, which could hinder the development of digital assets.
Last week, Silvergate shut down its Silvergate Exchange Network, a crucial component of its effort to provide a link between conventional banking services and the digital assets sector. Uncertainty surrounded the market that the Silvergate Bank operation would be able to serve without the service and after a departure of substantial clients.
In the past, Silvergate borrowed $4.3 billion from the Federal Home Loan Bank of San Francisco due to a run on deposits that occurred as pressure mounted on the cryptocurrency industry following the collapse of FTX last year. This decision eventually drew criticism from lawmakers on Capitol Hill.
