Silvergate Capital to Liquidate Bank Amid Regulatory Crackdown
Silvergate Capital, a central lender to the cryptocurrency industry, has announced the winding down of its operations and the liquidation of its bank. The company is one of the two primary banks for crypto firms, along with Signature Bank. The liquidation announcement caused the stock to plunge more than 36% in after-hours trading.
Reasons for the Liquidation
Silvergate cited recent industry and regulatory developments as the reason for the liquidation of the bank. The company believes that an orderly wind-down of bank operations and a voluntary liquidation of the bank is the best path forward. Silvergate has just over $11 billion in assets compared with over $114 billion at Signature Bank.
According to the liquidation plan shared by the company, all deposits will be fully repaid. However, the company did not specify how it plans to resolve claims against its business. Centerview Partners will act as Silvergate’s financial advisor and Cravath, Swaine & Moore will provide legal services.
Impact on Customers
The liquidation comes less than a week after Silvergate discontinued its payments platform known as the Silvergate Exchange Network (SEN), which was considered to be one of its core offerings. The company clarified that all other deposit-related services remain operational as the company winds down. Customers will be notified should there be any further changes.
Reasons for the Delay in Filing Annual 10-K
Silvergate said it would delay the filing of its annual 10-K for 2022 while it sorted out the “viability” of its business. The delayed filing was partly due to an imminent regulatory crackdown, including a probe already underway by the Department of Justice, Congressional inquiries, and investigations from its banking regulators, which include the Federal Reserve and the California Department of Financial Protection and Innovation.
Struggling for Months
Silvergate has been struggling for months. In addition to laying off 40% of its workforce in January, the firm reported a nearly $1 billion dollar net loss in the fourth quarter following a rush for the exits at the end of last year that saw customer deposits plummet 68% to $3.8 billion. To cover the withdrawals, Silvergate had to sell $5.2 billion dollars of debt securities.
Investment Firms’ Stakes in Silvergate
Investment firms Citadel Securities and BlackRock recently took major stakes in Silvergate, buying up 5.5% and 7%, respectively.
The liquidation of Silvergate Capital is a momentous development that bears significant implications for the cryptocurrency industry. As of now, the impact of this liquidation remains unclear, but it is expected to pose serious challenges for crypto firms and investors. Furthermore, it could potentially trigger increased regulatory oversight and scrutiny of the entire industry.
Bitcoin Traders Could Be Forced to Liquidate Positions, Warns Peter Brandt
The Bitcoin market continues to give neutral signals despite the weekly death cross that occurred during the weekend. Up approximately 2 percent in the past 24 hours, the top digital asset is exchanging around $22,127 on Wednesday. With over $81 million liquidated in the crypto market, about $23 million involved Bitcoin pairs. The spike on Tuesday is largely attributed to the CPI data that came in hotter than forecasts.
As the Fed continues to tighten monetary policies to curb the high inflation, crypto traders anticipate more choppy markets ahead. Moreover, the increased fear due to regulatory crackdowns in the United States could further exacerbate the selling pressure.
Notably, the SEC has argued that crypto staking and stablecoins programs should be registered as securities. As such, crypto liquidity is expected to crunch down in the coming quarters.
“Cryptos are weakening as every trader worries about how crippling this SEC wave will be with the cracking down on staking products and stablecoins,” said Edward Moya, an analyst at broker Oanda. “The news flow has been rather bearish for crypto.”
Closer Look at Bitcoin Analysis
The Bitcoin price action is heavily monitored due to its effect on the altcoin market and the general crypto trend. While the short-term price action remains undecided, most analysts are bullish on Bitcoin’s long-term success.
For instance, Ark Invest’s Cathy Woods has reiterated severally that Bitcoin is bound to hit $1 million in the next decade. Robert Kiyosaki, the author of Rich Dad Poor Dad, has indicated that Bitcoin will trade at $500k by 2025.
On a short-term basis, Veteran Trader Peter Brandt has asserted that Bitcoin could be forming a 3-day trailing stop rule signal. Notably, the trailing stop rule is a risk management strategy formed when a daily candle closes higher than the high of the candle that created the present low (the set-up day) and is validated when the next daily candle breaks the set-up day high (the trigger day).
Bitcoin (BTC) Price May Not Rise Above $20,000 as Grayscale May Liquidate their Holdings Soon
The Bitcoin price continues to trade within the same range, with reduced volatility from the past couple of days. Ever since the price dropped below $20,000, the markets have dropped into a deep bearish well. Therefore, it has become important for the BTC price to reclaim these levels to revive with a bullish trend.
But when will the star crypto rise above these levels? If yes at what levels, one can expect a firm rebound?
The BTC price has undergone a couple of bear markets earlier and marked a new bottom each time. Back in 2015 and 2018, the bear market had squeezed more than 80% from its interim highs. This was where the BTC price rally was triggered that roe high to mark new highs. Therefore, considering the previous price trends, the current bottom is predicted to be around $11,000,
On the other hand, Grayscale is believed to liquidate its BTC holdings as the U.S.Securities, under whose supervision it works, are likely to authorize a one-off redemption for Genesis to meet liquidity needs.
“With all of the SEC’s opposition to GBTC this year, we certainly don’t expect this to happen anytime soon. On the bright side, this also means a low chance of a large one-off BTC selling pressure from this,”
Collectively, Bitcoin price is expected to remain below $20,000 for a long time as the bearish could are set to hover for an extended period. Meanwhile, the bulls may try to keep up the price to some extent but eventually fail as many strong hands may remain away from the markets for a while.
Crypto.Com Price Drops by 55%, Should You Liquidate Your CRO?
The global markets continue to be under a deep bearish influence despite the bulls continuing to hold the price above the crucial support levels. Meanwhile, the selling pressure has eased to some extent, but it appears to be a major trap set up for the bulls. Additionally, the volume also has dropped notably which may reverse the current bullish trend in no time.
The collapse of the FTX exchange has led to a major drawback for another popular exchange, Crypto.com which has been a matter of concern for many. As per some reports, CDC witnessed massive withdrawals, speculating that the exchange was bankrupt.
It all started when the platform transferred nearly $400 million to FTX, which is clarified as a mistake but rather speculated as a cover-up. The market participants were agonized and dragged the funds out of the platform.
However, the CEO, kris marszalek kris marszalek ceo at crypto.com Kris Marszalek is an enthusiastic crypto entrepreneur and an active and true believer. Being a professional is the Chief Executive Officer at Crypto.com, built on a substantial establishment of security, privacy, and compliance and is the first cryptocurrency company across the world to have ISO/IEC, CCSS Level 3, PCI level 1 compliance, and autonomously assessed at Tier 4, the highest level for both NIST Cybersecurity and Privacy Frameworks. He associates and encourages startups to enhance their business and meet their aims.He along with his team of Crypto.com collaborated with Pay and Shopify, offering millions of merchants to accept crypto. He believes one of their core values at Crypto.com is to Remain Humble which means they don’t seek the limelight, always try to take the high road, and do the right thing. He always tends to ignore the noise, and prove people wrong with actions, not words.He is extremely experienced with 18+ years of experience, he previously, served in numerous respected and well-established organizations including Starline Polska Sp. z o.o., an award-winning Consumer Electronics design studio and manufacturing business as Co-founder & Senior Vice President, Co-founder & CEO at YIYI Hong Kong Limited, and BEECRAZY, one of the leading e-commerce business in Hong Kong, and CEO at Ensogo which was listed on Australian Security Exchange.He acquires a deep knowledge of innumerable skillfulness including Business Development, Business Strategy, E-commerce, Online Advertising, Mobile application, Digital strategy, Email Marketing, and Strategic Partnerships. He experienced growth and stability with Crypto.com which was encouraged by the launch of Defi Swap and he never stopped promotional campaigns. The platform announced imperiously that it has received provisional approval for a virtual asset MVP License from the Dubai Virtual Asset Regulatory Authority. At present, it serves over 10 million customers with the world’s quickest growing crypto application. EntrepreneurChief Executive Officer Followers : 0 View profile , admitted to mishandling funds but assured that the platform is in good health. Meanwhile, the CRO price, which had been notably recovering, is speculated to come under the bearish influence again.
The volume has dropped notably in the past couple of hours, which may intensify the bearish pressure over time. Meanwhile, the RSI is trying to rise but also displaying the possibility of a stagnant trend in the next couple of hours. On the other hand, the MACD is still bearish despite a minor buying pressure mounting up.
Therefore, the CRO price may continue to remain under bearish pressure and could also plunge heavily to form new monthly lows close to $0.05 very soon.
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Will Microstrategy Liquidate its Bitcoin Holdings if BTC Price Drops To $12K?
2022 has been disastrous for the crypto space. Yet again, Bitcoin is witnessing one of the most severe crashes and has marked a record as the fifth asset to witness the worst collapse in the history of finance. Bitcoin, which accounts for 41% of the cryptocurrency market, experienced lows that had not been seen since the pandemic’s low two years ago.
When there’s a crash of this magnitude, it’s safe to anticipate that nearly all crypto holders are suffering losses- especially people who joined the game later on. Not only individuals but even firms have also been hit hard. This includes the biggest Bitcoin-owning company, MicroStrategy Inc. It is said to be sitting on unrealized losses from its acquisitions totaling $1.8 billion.
The software firm with headquarters in Tysons Corner, Virginia, and its affiliates, currently control about 130,000 Bitcoin, valued at about $2.2 billion at the time of writing. Each Bitcoin cost approximately $30,369. The total cost of the Bitcoins purchased was close to $4 billion. The corporation is now $1.8 billion in the hole as a result.
Michael Saylor, the executive chairman of the firm, had declared that the business will never sell its Bitcoin. The corporation is sitting on large paper losses as a result of its refusal to sell. Additionally, the business incurred an impairment charge of $917.8 million after reporting losses resulting from the fall in the price of bitcoin earlier this year.
Since Bitcoin is categorized by MicroStrategy as an intangible asset, any decline in its value must be permanently recorded as a loss. If it decides to sell its Bitcoin, it must notify the Internal Revenue Service of any capital gains.
After MicroStrategy reported $1 billion in losses in August 2022, Saylor resigned as CEO to concentrate on the business’s Bitcoin strategy. Since then, the business spent an extra $6 million buying 301 Bitcoins in September 2022. Since then, the average price of Bitcoin has dropped by roughly 15%, meaning that they’re undergoing even larger losses at the moment.
Michael Saylor, however, insisted that compared to cash or gold, cryptocurrencies were less risky investments and shall reap massive profits later.
No Margin Call?
Saylor refuted that MicroStrategy had received a margin call on a $205 million loan with Silvergate Capital that was secured by bitcoin in June 2022. A margin call occurs when an investor borrows money to trade that is a multiple of a predetermined amount known as a margin. The investor must contribute more money to maintain the open position when the value of the margin falls below a certain level.
Saylor stated that unless the price of Bitcoin dropped below $3,500, the business had enough Bitcoin to keep the debt collateralized.
Urgent Need For Crypto Regulations
Saylor stated that the current collapse of FTX is both beneficial for Bitcoin and disastrous for the cryptocurrency industry in an interview with CNBC on November 10, 2022. According to him, unlike exchange-traded tokens, Bitcoin is a commodity that can be self-managed.
He insists that the regulators must provide clearer instructions on how to register a digital security, a digital currency, a digital token, and one’s digital exchange.
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Is the Last Capitulation Wave Coming? Whales Liquidate Bitcoin While Miners Get Rid of It
Exchange contagion has become a historical tendency that occurs close to the absolute BTC bear market bottom. During the previous bear cycles, it was Mt.GOX, later Bitmex and now FTX. It appears to have become a pattern of let.
The crypto markets are trying very hard to recover very hard from the recent sell-off that led to nearly a drop of 15% to 20%. While the assets are gaining some pace, the possibility of yet another leg down emerges
Bitcoin in the past couple of months has experienced nearly a billion realized loss as whales & miners continue to remain extremely cautious of the current market trends. The BTC whales who have been holding 1000 BTC to 10,000 BTC have either sold or redistributed nearly 140,000 BTC.
The amount of BTC held was worth more than $4.93 million at the times when BTC prices were trading between $20K to $21K. Meanwhile, as the markets turned down, the price began to plunge which in turn ignited a steep drop in the whale holdings. Presently, the holdings have dropped below $4.7 million.
Alongside, the miners also appear to have been extremely cautious as their reserves are slowly getting dried up. At this price, it may be extremely difficult for the miners to mine Bitcoin as they are facing significant losses. Therefore, in the past couple of days, miners have dropped nearly 3000 BTC from their reserves.
The steep decline was recorded ever since the issues with FTX-Alameda Research ignited huge FUD within the markets. Since then, the price of BTC has dropped by 25%, while the miners have flooded the streets with 3000 BTC worth nearly $48 million. Meanwhile, a more descending trend is largely expected that may bring down the entire crypto market to new lows.
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Crypto Markets Feared to Hit Bottoms! Should you Liquidate all of your FTT?
No sooner than Binance CEO, Chanpang Zhao (CZ) compared the FTT price plunge with the unfamous LUNA price slash, hefty withdrawals were registered in a very short time frame. Interestingly, the indicators point toward the revival of the bearish trend and hence the token is expected to continue shedding its value ahead.
Meanwhile, the question still arises, whether one should liquidate FTT or hold and wait for a notable recovery.
The market trends seem to have flipped largely as Bitcoin failed to secure its levels beyond $21,000. However, the dropping market sentiments were further fueled as Binance plans liquidated all their FTT tokens in the coming days. This led to a huge FUD which compelled the market participants to exit the FTX exchange hampering the FTT price rally.
Binance exchange, which exited FTX’s capital, a year ago, received $2.1 billion worth of BUSD & FTT stablecoins as compensation. Now, when the popular exchange is preparing to liquidate, will it create a death spiral within the markets as it did during the LUNA-UST collapse?
It has to be noted that Terra’s collapse was incorporated with other elements like the failure of an algorithm stablecoin. This compelled the platform to liquidate more than 80K BTC which further dragged the entire market down. However, the crash further created a huge domino effect on the other platform which were directly or indirectly related to the Terra ecosystem.
Presently, no BTC is at stake, but the possibility of a significant price plunge may not be completely discarded. Liquidating FTT tokens worth billions may surely mount significant bearish pressure over the space but the bulls may also trigger a firm rebound at the right time.
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Binance Plans To Liquidate Its FTX Holdings, FTT Price Drops 5%
While most of the cryptocurrencies are enjoying a bull run for more than a week, FTX’s native token, FTT, was hit with severe volatility after Binance’s recent move. On Nov 6, Binance CEO Changpeng Zhao announced that Binance had begun liquidating FTT tokens after which the FTT declined nearly 9.4%.
Also it’s a known fact that FTX uses FTT as collateral for various loans and because of which there is a fear of another crypto crash. At the time of writing, FTX token is selling at $22.16 with a fall of 4.38% in the last 24hrs.
Now, with Binance’s decision to liquidate all of its FTX tokens might bring another Terra LUNA like crypto crash.
Binance To Liquidate All Of Its FTT Tokens
Basically, the FTT tokens that Binance holds are the assets that are received as part of its exit from an early investment in FTX. However, CZ claims to liquidate its holdings gradually so that the crypto market is not impacted.
As per the reports, Alameda research, a trading firm that is owned by Sam Bankman Fried (SBF) was holding more than $3 Billion worth of FTX exchange unlocked token on its balance sheet. Here, FTX exchange is the one that issues FTT tokens and FTX is also owned by SBF.
Though there is no proper reason for Binance’s move against SBF and FTT token, one reason might be because Binance considers holding FTT token on their books as liability.
Now, after Binance other market participants have joined, such as Jump Trading, has withdrawn nearly 40.4 million USDC from FTX exchange . Also around $109.8 million worth of cryptocurrency has been moved from FTX exchange to Nexo, a crypto lending platform which also includes 56,432 ETH and $13.9 million in stablecoins.
However, FTX CEO SBF has asked its users not to panic as all the withdrawals are working well. He also claimed that FTX and its group of companies have audited financial data.
The news is definitely hampering FTT token’s performance and currently $20-$21 is the major support area. If the token falls below $20 there will be more downfall ahead.
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Bitcoin Miners Might Soon Liquidate if BTC Price Continue To Slump
The miner’s profitability could be harmed by the rising cost of mining blocks. Since the price of Bitcoin has been falling over the course of the year, from $46,000 to roughly $19,300, analysts estimated that the difficulty hike would reduce the miners’ profits by about 20%.
Leading analytics company Glassnode issues a dire warning about a particular group of Bitcoin owners who collectively possess nearly $1.5 billion worth of BTC.
According to Glassnode, the hash rate for Bitcoin, which gauges the network’s processing power, is at an all-time high.
While an increase in network hash power puts BTC miners in a vulnerable financial position, a greater hash rate suggests a more resilient network that is more secure against an attacker.
“Bitcoin Difficulty has adjusted to a new all-time high due to a rapid increase in network hash power. This increases the BTC cost of production, and puts additional stress on miners.”
The analytics company estimates that it will now cost $19,300 to manufacture one Bitcoin through mining, which is more than the currency’s current value of $19,067. According to Glassnode, the combination of rising production costs and a low price for BTC indicates that miners face a significant danger of capitulation.
The Difficulty Ribbon Compression is an on-chain indicator that employs simple moving averages of the Bitcoin network difficulty to assess the impact of miner selling pressure on the king cryptocurrency’s price. The Puell Multiple is a statistic that examines BTC miner earnings.
Glassnode further emphasizes that BTC miners have been actively selling off their stock in recent months.
Approximately 78,200 Bitcoins ($1.49 billion) are now held by bitcoin miners in their treasuries, and this amount has been rising overall since mid-2019.
The deceleration in miner treasury growth over the past several months has been the most dramatic in the recent three years.