Last week, news quickly circulated that Silvergate Bank, a crypto-friendly bank, was in hot water and had to stop offering USD services to its around 1,600 crypto customers. This obviously had a significant impact on the market as assets such as Bitcoin and Ethereum quickly lost a good portion of their gains from January. Even now, the market continues to feel the after-effects of the Silvergate announcement, but what’s even more shocking is the fact that the USD drought from crypto firms might be deliberate.
Is Halting USD Transfers Deliberate?
In a new report, Matrixport head of research Markus Thielen highlights recent developments in the crypto space when it comes to USD transfers. The first crypto platform to succumb was the Binance exchange which announced that it would no longer be able to handle USD transfers. Now, another exchange has followed suit.
On Monday, ByBit revealed that it will be pausing USD transfers on the platform from Mach 10. All of these could be linked to the Silvergate crisis which has no doubt affected the space tremendously. However, the Matrixport report notes that all of these could be intentional to reduce access to USD for crypto companies.
The report points to these three events as possible evidence of this cut-off, which has already caused prices of cryptocurrencies to go down since then. It has also affected the trading volume of bitcoin since then which is already down around 50% during this time. For this reason, there could be more decline in prices to come, Thielen reasons, pointing to the decline in bullish sentiment among investors.
“The futures market for Bitcoin and Ethereum is also showing less bullish sentiment with the basis trading negatively,” the report notes. “We are in a situation where accidents can happen, and prices could gap lower.”
Market cap declines to $988 billion | Source: Crypto Total Market Cap on TradingView.com
Will The Crypto Market Succumb To The Pressure?
Since the first crash following the Silvergate news, the crypto market has managed to hold up quite well. Although the total market cap fell below $1 trillion following the market crash, it maintained tight movement in the $970 billion to the $990 billion even through the weekend, reflecting the tug of war between bulls and bears to gain control of the market.
Even now, Bitcoin’s price holding above $22,000 still shows that there is still some bullish sentiment in the market. This is likely what is still holding the market up, but with ByBit set to halt USD transfers, it is likely going to have an impact on the price, which will still push down the market cap.
However, there is still a lot of support for Bitcoin above the $20,000 level which is likely to be the main region of support for bulls ahead of the next bull market. So despite the expected selling pressure expected in the market, BTC is likely to hold above its January lows.
