Bitcoin: Silicon Valley Bank has long been regarded as the lifeblood of technology startups, offering traditional banking services while funding projects and businesses deemed too risky for traditional lenders. Hundreds of millions of dollars in venture capital flow in and out of the bank’s vaults.
However, the firm’s intimate ties to technology make it particularly vulnerable to the industry’s boom-and-bust cycles, and those risks became abundantly clear on Thursday.
Bitcoin’s (BTC) price has dropped below $20,000 for the first time since mid-January, as a wave of bearish news has overwhelmed crypto’s strong 2023 uptrend.
The largest cryptocurrency by market capitalization quickly regained some of its lost ground late Thursday (ET), hovering around $20,040, down 7.7% in the previous 24 hours.
After reaching a record high of over $69,000 in November 2021, bitcoin fell late that year and throughout 2022, ending the year at around $16,600. A strong rally into mid-February put bitcoin more than 50% ahead for the year at one point, reaching $25,000.
Also Read: Paytm shareholding changes: Ant Financials exceeds 25% mark, MFs increase their stake
According to a financial update issued late Wednesday, SVB was forced to sell $21 billion in securities at a $1.8 billion loss, while also raising $500 million from venture firm General Atlantic. SVB lost two-thirds of its value last year after its stock soared 75% during the 2021 market rally, then dropped another 60% during regular trading on Thursday and another 22% after the close.
BREAKING: US stocks and crypto have now lost over $2 trillion in market cap in under 24 hours.
Stock market futures just hit a 2-month low and #Bitcoin broke below $20,000.
Meanwhile, a collapse of Silicon Valley Bank would mark the 2nd largest bank failure in U.S. history.
— The Kobeissi Letter (@KobeissiLetter) March 10, 2023
However, events since then have provided ample reasons for sellers to emerge. Among them was a stronger-than-expected inflation report, which called into question the Federal Reserve of the United States’ early 2023 assertion that a disinflationary trend had begun. The Federal Reserve has admitted as much, with Chair Jerome Powell telling Congress earlier this week that the central bank has a long way to go to get inflation back to its 2% target.
