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Bitcoin (BTC-USD) dropped more than 7.5% to $20,300 late Thursday, hitting a seven-week low for the largest cryptocurrency.
“This remains a challenging environment for cryptocurrencies. Oanda senior market analyst Edward Moya said further selling pressure on Bitcoin could test the $20,000 level.
Ether (ETH-USD) has fallen by the same amount over the period and is currently trading at $1,439 per coin.
According to Coinmarketcap, Crypto’s market cap fell by more than 6% from $1 trillion to $942 billion by Thursday.
Crypto investors and businesses grapple with what the liquidation of a key US banking partner, Silvergate Capital (SI), means for access to the dollar for the crypto asset class.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, told Yahoo Finance:
Silvergate provided a payment network that allows customers to exchange USD between accounts 24/7 to meet the liquidity needs of the cryptocurrency market. Banks suspended recruitment last Friday.
Another bank most amenable to crypto firms, Signature Bank (SBNY) is also aggressively reducing its exposure to the digital asset business. Kaiko analysts said on Thursday, “If smaller banks such as Customer and Password (formerly Metabank) do not step in to fill the gap, other alternatives include Connor Ryder, a stablecoin other than Euros and Dollars. includes,” he said.
“It’s an ecological blow, but it’s unlikely to be permanent,” Acheson added.
Crypto markets also came under pressure on Thursday as widespread financial stress hit the banking sector amid new challenges such as Silicon Valley Bank. That’s news that shares of parent company SVB Financial fell 60% on Thursday as the benchmark S&P 500 fell about 1.8%.
Elsewhere, the Biden administration is proposing to raise $24 billion for the US government by plugging tax loopholes. Loopholes allow investors to recover cryptocurrency losses to offset capital gains and personal income.
Coinbase Chief Legal Officer Paul Grewal said Thursday afternoon before the U.S. House of Representatives Financial Services Committee, “As other countries safely bring cryptocurrencies into regulatory boundaries, we should do the same,” he said.
Coinbase (COIN), the largest U.S. cryptocurrency company, has multiple banking partners and closed its deals with them last week, so there is no immediate risk of a Silvergate liquidation.
Despite this, CFRA Research chose to maintain a neutral holding rating on Coinbase shares.
“While COIN measures more of its direct exposure to SI, its indirect impact on the health of its like-minded clients and/or general investor enthusiasm (i.e., trading activity) is also more likely to influence COIN’s fundamentals. can create an overhang in the thursday notes.
Coinbase shares fell 7.8% to $58 on Thursday.
The New York Attorney General’s Office is also suing KuCoin, the fourth largest crypto exchange by trading volume, for failing to register as a securities and commodities broker-dealer.
“My office is taking action against cryptocurrency companies that brazenly ignore our laws and put investors at risk,” said Attorney General Letita James.
David Hollerith is a reporter at Yahoo Finance. follow him on twitter @DSHollers
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