The suspension of a cryptocurrency payments network by Silvergate Bank causes shares to tumble by ten percent. The market for cryptocurrencies reacts to this by trembling, which can be felt everywhere in the market.
A fall in price can be attributed to the decision of a financial institution to discontinue its cryptocurrency payments system. Within the first few minutes of trading, the stock price of the financial organization saw a drop of 10 percent.
Sen May Foreshadow the Bank’s Demise
The experts believe that the conclusion of the SEN is likely to be a precursor to the bank’s decision. It brings a stop to the activities it was engaged in.
The price of a share of Silvergate at its current valuation of $4.86 is a new all-time low for the firm. As a direct result of this, the total market valuation of the corporation has shrunk by around $7 billion.
This drop in share price is directly responsible for this, as you can see below. Silvergate Capital Inc., which was established in 2017, has placed a significant emphasis on the cryptocurrency market since its inception.
It saw a precipitous drop of 10% in its share price during the early trading session on Monday. The company’s announcement that it will be discontinuing its bitcoin payments network led to this decline in stock price.
In this particular forum, concerns were voiced regarding the possible future courses of action that the bank could decide to pursue.
The Silvergate Exchange Network, often known as SEN, was discontinued as a result of a decision that considered risks.
Until it was taken off the market, this item served as the major and most profitable flagship offering for the financial institution.
Due To the Drop in Stock Price, This Has Happened
The reality that the service has been discontinued has given rise to conjecture on the part of certain individuals.
It is quite probable that this is a sign that the bank is making preparations to terminate its business activities.
Ebang International, Canaan Inc., and Riot Platforms all saw between a one and two percent decrease in their share prices.
While those of Coinbase Global and Signature Bank dropped by roughly 1 percent and almost 2.5 percent, respectively.
Canaan Inc. share prices dropped by an amount that was somewhere between one and two percent during the past several days.
Bernstein experts claim that the announcement of the bad news caused a 4.8% decline in the value of both Bitcoin and Ethereum.
Since reaching an all-time high in November 2021, the price of Silvergate shares has dropped to an all-time low of $4.86. This is a reduction of 98% compared to its previous all-time high position.
As a direct consequence of this, the market valuation of the firm has shrunk by more than $7 billion.
According to the analysts at Wedbush, a scenario in which the company goes into receivership or liquidation is a distinct possibility.
They have arrived at the conclusion that each share of stock will be worth $5 when it is put up for sale. As compared to the most recent price at which the stock was traded, this represents a decline of nearly 13%.
The titans of the cryptocurrency business, such as Coinbase Global, have broken their financial relations with Silvergate. It was acting as its financial customer before such links were severed, but it is no longer doing so at this time.
The failure of Sam Bankman and Cryptocurrency Fried’s exchange FTX resulted in investors withdrawing $8 billion in assets from the bank.
The bank has had a tough time staying afloat since the beginning of the year, especially during the past three months.
This caused investors to withdraw $8 billion in assets from the bank over the course of the last three months of the year.