Silicon Valley Bank (SVB), representing the United States information technology hub, Silicon Valley, went bankrupt due to a bank run, massive deposit withdrawals, in under 14 hours.
SVB’s bankruptcy is the second-largest in history after Washington Mutual went under during the Global Financial Crisis (GFC) in 2008.
Silvergate Capital, one of the top 10 cryptocurrency banks that announced voluntary liquidation on Feb. 8, is in the same situation as SVB. Silvergate said it suffered significant losses and sold billions of dollars in assets to address withdrawals a day after the crypto market crashed. The implosion began when investors began withdrawing money following the collapse of FTX.
As CNBC said:
“SVB claims that they have little relation between cryptocurrency companies and banks, but investors are connecting the two events, saying that SVB, like Silvergate, has become inevitable to reorganize financially.”
The fear of “bank run” remains
There are expectations that the liquidation of Silvergate, like the FTX bankruptcy, will cause a liquidity contraction. According to a recent report by JP Morgan, “the bankruptcy of Silvergate Bank will bring another disappointment to the cryptocurrency market,” and “it is difficult for cryptocurrency exchanges to change their networks for dollar deposits and withdrawals. The bankruptcy of Silvergate will significantly impact the cryptocurrency industry that relies heavily on a fast and efficient deposit and withdrawal system.”
The cryptocurrency market, which slightly recovered at the beginning of the year, is now inching lower following news of Silvergate’s liquidation. Bitcoin has since fallen from the $25,000 zone, testing $19.700 last week. Analysts expect another FTX-like incident to possibly force the markets lower.
Hybrid DEX technology to offer reprieve?
Due to consecutive ‘bank run’ incidents, the safety of investor assets is b
Go to Source to See Full Article
Author: Dalmas Ngetich
Tip BTC Newswire with Cryptocurrency
Donate Bitcoin to BTC Newswire
Donate Bitcoin Cash to BTC Newswire
Donate Ethereum to BTC Newswire
Donate Litecoin to BTC Newswire
Donate Monero to BTC Newswire
Donate ZCash to BTC Newswire
