Bitcoin at Three-Week Low as Silvergate Fallout Weighs on Crypto - BLOOMBERG
(Bloomberg) -- Bitcoin fell to a three-week low, sapped by the collapse of crypto-friendly bank Silvergate Capital Corp. and the prospect of higher-than-expected central bank interest rates.
The largest token fell as much as 1.9% on Thursday, dropping for a fourth session, and was trading at about $21,780 as of 10:28 a.m. in Singapore. Smaller coins ranging from Ether and Solana to Avalanche were subdued.
Silvergate bank, which closed a key crypto payments network last week, said Wednesday it plans to liquidate. The US lender is another victim of the digital-asset rout and the blowup of the FTX exchange. Few banks are willing to work with the volatile crypto sector and Silvergate’s demise adds to that challenge.
“It’s hard to make a fundamental argument for crypto here, just given all the uncertainty — you don’t know what regulation is coming down the pike,” said Kara Murphy, chief investment officer at Kestra Investment Management.
Investors across global markets are also digesting the likelihood of higher borrowing costs to prevent elevated inflation becoming entrenched. That backdrop bodes ill for riskier investments like virtual coins.
Federal Reserve Chair Jerome Powell on Wednesday repeated his message that the central bank is likely to take rates higher than previously anticipated and that it could move at a faster pace if economic data keeps coming in hot. He said no decision had been made about what to do at the March policy meeting.
Bitcoin may well “continue its correction” toward its 200-day moving average near $20,000 as long as the token stays below an area of resistance at $25,000, Tony Sycamore, market analyst at IG Australia Pty, wrote in a note.
The Grayscale Bitcoin Trust gained on optimism Grayscale Investments LLC may win a court fight challenging the US Securities and Exchange Commission’s decision to reject its conversion into an exchange-traded fund.
The fund’s discount to net asset value has narrowed to about 34% from a peak of almost 50% in December.
--With assistance from Vildana Hajric and Suvashree Ghosh.