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The collapse of three banks in the US, including the giant Silicon Valley Bank (SVB), within a week has hammered the global crypto market, wiping off more than $70 billion as Bitcoin fell below $20,000 per single coin. On Monday, March 13. Bitcoin was hovering around $18,000 and Peter Schiff, CEO of Euro Pacific Capital, predicted the world's largest cryptocurrency could soon drop below $4,000.
Two crypto-friendly banks Silvergate Capital and Signature Bank collapsed last week, and billions of dollars belonging to crypto exchanges got stuck. Signature Bank was shut down by the New York regulators and all depositors of Signature Bank "will be made whole".
Signature Bank had $88.59 billion in deposits as of December 31, 2022 and the New York Department of Financial Services has taken possession of the bank. Leading crypto exchange Coinbase had $240 million in cash at Signature Bank.
"As of close of business Friday March 10, Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds," the crypto exchange said in a tweet.
Circle, the firm behind USDC stablecoin, is also affected by the Signature Bank closing. Its CEO Jeremy Allaire said in a tweet that with the closure of Signature Bank, "we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon".
"Additionally, we will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust and automated USDC settlement and reserve operations," he added. Crypto firm Circle also has $3.3 billion stuck at SVB, the non-crypto bank that collapsed last week, triggering panic in the tech industry.
Bankrupt crypto lender BlockFi also has $227 million in funds stuck at SVB. Top cryptocurrency exchanges Binance and Coinbase have also temporarily suspended USDC stablecoin conversions after the collapse of SVB.
Another US traditional bank Silvergate Capital last week announced it was "wind down operations and voluntarily liquidating" its bank division. The interest rate hikes over the past year has badly affected risk assets like cryptocurrencies.