When Silvergate (SI) liquidated its assets to return deposits to customers, Bitcoin (BTC-USD) barely moved. The support level of $22,500 broke down when regulators shut down Silicon Valley Financial (SIVB). The sudden drop in the S&P 500 last week also hurt BTC prices.
BTC bulls will fight hard to hold the $20,000 line after it fell below that last Friday. They have an uphill battle. The market erased $70 billion in value of the cryptocurrency market in only 24 hours. Speculators are discouraged from buying Bitcoin, stocks in the financial market, or other cryptocurrencies.
What happens next?
Watch for the orderly unwinding of SIVB. Look closely at the impact of SIVB on its customers. For example, Rocket Labs, Roku (ROKU), and QuantumScape (QS) are some of the firms with deposits in SIVB. ROKU has 25% of its cash in SIVB, with only $250,000 insured by the FDIC. SIVB customers need access to funds to meet payroll obligations.
SIVB customers will write down some of its losses. This is not big enough to damage their business. Chances are low that this bank’s failure will spook BTC investors.
BTC remains the reserve digital currency in the crypt space. Other coins have downside risks. Bitcoin should hold its value as investors park their crypto in this popular coin.
