George Soros Increases Crypto Exposure - Fund Invests in Marathon Debt, MicroStrategy Shares But Shorts Silvergate

The decline of crypto-focused bank Silvergate is yet more proof that the implosion of Sam Bankman-Fried’s FTX exchange is still haunting the industry.

Experts predicted the liquidity crunch caused by the fallen giant would take a long time to resolve – possibly lasting until the end of 2023.

A filing by Silvergate on Wednesday, and news that they would not release their annual financial report, sent Bitcoin price on a 4.3% dive and left it to trade at a two-week low of $22,000.

Bitcoin Price and Cryptos Bleed As Silvergate Raises Financial Trouble Alarm

Bitcoin price felt the pressure as investors reacted to news that Silvergate is evaluating its capital position to gauge its ability to survive the crypto winter.

These declines were echoed across the board with Ethereum price nosediving by 4.6% – the sell-off touched on most of the top 100 crypto assets, pushing the total market cap 3.8% down to $1.076 trillion.

coinmarketcap top 10 030323

As reported on Thursday, Silvergate warned it would miss the next report on March 16 with the Securities and Exchange Commission (SEC).

The crypto-oriented bank cited a waning capital position that has been worsening since its previous monthly report in January – when it posted undesirable earnings in Q4 2022.

Silvergate reckoned there is the need to evaluate “the impact that these subsequent events have on its ability to continue as a going concern for the 12 months following the issuance of its financial statement,” the Financial Times reported.

Besides, its financial position is likely to be impacted further as key clients like centralized exchange Coinbase and Galaxy Digital, a leading asset management firm, distance themselves from doing business with the crypto bank.

In separate statements sent out on Thursday, Coinbase and Galaxy Digital reckoned that recent development at Silvergate called for action “out of an abundance of caution” to protect their clients and companies’ assets.

The filing puts a once thriving crypto-focused bank serving miners, exchanges, and custodians in the spotlight amid a looming fall.

This means its exit from the market leaves a gap that would have to be filled in the industry struggling with cryptocurrency regulation and oversight.

Evaluating Before and After Silvergate

Silvergate and another crypto-friendly bank, Signature made headlines earlier this year, although briefly, for taking out loans disbursed by a United States government program designed to back mortgage lending.

The move was unsettling for some stakeholders in the crypto industry but some thought as banks, Silvergate and Signature were expected to do just that.

At the time, some people believed the two crypto-friendly banks were setting themselves up for failure. Barely a couple of months later, trouble knocked on Silvergate’s doors.

For now, the situation looks grim for Silvergate, with projections of a return to normal operations remaining dismal – judgment on whether Silvergate will survive this capital position turmoil would best be left to the professionals.

Silvergate’s primary clients are already mulling over alternatives to cater to their financial needs. Intriguingly, a recently published report by CoinDesk speculates Signature to be the biggest beneficiary of Silvergate’s financial woes.

It’s not only Coinbase and Galaxy Digital that are jumping ship for new banking partners. Ark Invest’s Cathie Wood sold out 99% of its holdings in Silvergate in January.

Shares of the bank have tumbled significantly to $5.72 at the close of trading on Thursday. This represents a 97.38% from $219 at the peak of 2121’s crypto bull market.

The likely winding of Silvergate crypto-friendly bank cannot be attributed to the federal loan alone. Many factors led the bank to its knees, including its relationship with FTX’s Alameda Research and the recent regulatory pressure from US regulatory agencies.

Signature, another crypto-friendly bank is ready to absorb customers abandoning Silvergate amid the capital position evaluation process.

However, the question that remains is – will Signature survive the increased oversight of the industry, which might have been expanded to include service providers like banks?

Where Is Bitcoin Price Headed After The Dip To $22,000?

Life turned difficult for the bulls the moment Bitcoin price failed to uphold support at $24,000.

Efforts to reclaim the ground above this new 2023 point of control have resulted in futility, leaving BTC vulnerable to bearish advances.

BTC/USD daily chart

The pessimistic outlook for Bitcoin price was further exacerbated by price action below the dotted rising trend line and recently the 50-day Exponential Moving Average (EMA) (line in red) at $22,375.

The largest crypto’s two-week low at $22,000, as reinforced by the rising trendline (continuous line) is the current point of control on the downside.

The sweep at this level could tap into fresh liquidity reinforced by the 200-day EMA (line in blue) at $21,769, allowing Bitcoin price to build momentum for a quick rebound to $24,000.

Nevertheless, new entry positions at this level may have to wait until Bitcoin price shows signs of a waning downtrend.

Remember, the Moving Average Convergence Divergence (MACD) indicator dons a sell signal that came to taunt bulls on February 24.

Similarly, the Money Flow Index (MFI), an indicator that underlays the chart like the MACD reveals there is a negative flow of funds in BTC markets.

In other words, outflow volume is significantly overwhelming inflow volume. Therefore, the pressure still mounting on Bitcoin price needs to cool off to create a conducive environment for profitable buy orders placed above $22,000.

On the upside, a break and hold above $24,000 would blast Bitcoin price to the next psychological resistance at $28,000.

That said investors should be on the lookout for data releases in March, for instance, the 10 March Non-farm Payroll and Unemployment report, the March 14 CPI data release, the March 15 PPI report, and the much-awaited 22 March FOMC meeting.

Bitcoin Alternatives To Buy Today

Before buying the Bitcoin dip, you may want to check out some of the best crypto presales for 2023.

Business2Community reviews the list of the best altcoins to buy, bringing to your attention possible options to diversify your crypto portfolio.

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