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    Crypto Market Slumps After News of Silvergate Troubles and Fed Rate Hikes

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    On Thursday evening and Friday morning, the worth of cryptocurrencies decreased drastically due to the recent news of Silvergate Capital, the institution which supports a lot of crypto's leading players, losing significant customers and being on the edge of bankruptcy.[0] Bitcoin fell 4% to $22,385 from Thursday morning to Friday, hitting a 16-day low, while Ethereum also slid 3% overnight.[0]

    The Federal Reserve, tasked with ensuring price stability and maximum employment in America, is projected to declare a raise in interest rates at its upcoming gathering, beginning on March 22, 2023.[1] Since early 2022, the Federal Reserve has been increasing interest rates in response to some of the highest inflation levels recorded in the last 40 years.[2] Chairman Jerome Powell indicated earlier this month that further rate increases are likely as the economy continues to make strides.[2]

    The news of Silvergate's financial woes put further pressure on the cryptocurrency market.[3] Many of Silvergate's major clients, such as Coinbase (COIN 1.27%), announced they would stop using the bank, and Silvergate's stock fell a whopping 58% and is down nearly an additional 11% today, trading around $5 per share.[4] CoinMarketCap data showed that Bitcoin dropped 1.45% in the last 24 hours to US$23,172 as of 8 a.m. in Hong Kong, and had declined 5.23% in the last seven days.[0] Ether dropped 1.69% to US$1,606, resulting in a 3.[5]

    Silvergate, as a Federal Reserve member bank, has positioned itself as a bridge between traditional finance and the world of cryptocurrency.[4] The bank experienced a US$1 billion loss for the fourth quarter of 2022 due to the FTX collapse.[6] In January, 40% of its staff were laid off.[6] Silvergate felt immense pressure due to the uncovering of the scandal and subsequent bankruptcy of FTX, a major client of theirs.[7]

    Ratio of Bitcoin Exchange Whale. CryptoQuant is a[8]

    CryptoQuant analyst abramchart reports that whale activity is increasing on Bitcoin spot exchanges. The Whale Ratio for Bitcoin Exchanges – a measure that looks at the top 10 Bitcoin inflows into exchanges relative to the total number of exchange inflows – increased to 0.78 on March 1st, up from approximately 0.5 in the previous month. Bitcoin funding rates, all exchanges | CryptoQuant is a[9][8]

    In the last 24 hours, the overall crypto market capitalization declined by 1.02%, bringing it down to US$1.[10]

    0. “Latest Crypto Collapse: Bitcoin And Ethereum’s Losses Top $24 Billion As Silvergate Unravels” Forbes, 3 Mar. 2023, https://www.forbes.com/sites/dereksaul/2023/03/03/latest-crypto-collapse-bitcoin-and-ethereums-losses-top-24-billion-as-silvergate-unravels/

    1. “Higher Than Expected PCE Numbers Push Bitcoin Down” BeInCrypto, 24 Feb. 2023, https://beincrypto.com/pce-numbers-push-bitcoin-down/

    2. “Bitcoin Falls 3% As PCE Rises 0.6% in January” CryptoPotato, 24 Feb. 2023, https://cryptopotato.com/bitcoin-falls-3-following-as-pce-rises-0-6-in-january

    3. “Bitcoin Delivers Major Bullish Signal for First Time in Over a Year” Royals Blue, 1 Mar. 2023, https://royalsblue.com/bitcoin-delivers-major-bullish-signal-for-first-time-in-over-a-year

    4. “Why Shiba Inu, Solana, and Cardano Are Falling Today” The Motley Fool, 2 Mar. 2023, https://www.fool.com/investing/2023/03/02/why-shiba-inu-solana-and-cardano-are-falling-today/

    5. “Bitcoin, Ether fall; Polkadot leads losers among top ten tokens” Yahoo Life, 1 Mar. 2023, https://www.yahoo.com/lifestyle/bitcoin-ether-fall-polkadot-leads-024635928.html

    6. “Bitcoin slides below US$23,000 in broad crypto price slump” Forkast News, 3 Mar. 2023, https://forkast.news/headlines/bitcoin-below-23k-ether-slides-price-slump/

    7. “Why Bitcoin, Ethereum, and Shiba Inu Are Falling Today” The Motley Fool, 3 Mar. 2023, https://www.fool.com/investing/2023/03/03/why-bitcoin-ethereum-and-shiba-inu-are-falling-tod/

    8. “Bitcoin Saw Low Volatility During the Month of February” ETF Trends, 3 Mar. 2023, https://www.etftrends.com/crypto-channel/bitcoin-saw-low-volatility-during-the-month-of-february

    9. “Bitcoin Funding Rate Turns Negative, Short Squeeze Incoming?” NewsBTC, 3 Mar. 2023, https://www.newsbtc.com/news/bitcoin/bitcoin-funding-rate-turns-negative-short-squeeze-incoming/

    10. “Bitcoin, Ether fall along with most top 10 cryptos amid potential for larger interest rate hikes” Yahoo Life, 2 Mar. 2023, https://www.yahoo.com/lifestyle/bitcoin-ether-fall-along-most-093353901.html

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