Over $200M Crypto Futures Liquidated After Silvergate Crash: What Happened?
The cryptocurrency market experienced significant volatility following the collapse of Silvergate Capital Corp, a key lender to the crypto industry. According to CoinGlass, over $200 million worth of long crypto futures were liquidated within a 4-hour period, with a staggering $185 million wiped out in just 45 minutes. This liquidation event is directly linked to the uncertainty surrounding the future of the crypto industry after the Silvergate crash.
Silvergate\'s Liquidation: A Domino Effect?
Crypto-focused bank Silvergate Capital Corp said on Wednesday it planned to wind down operations and voluntarily liquidate after it was hit with losses. Citing “recent industry and regulatory developments”, Silvergate on Wednesday announced that a “voluntary liquidation of the bank is the best path forward”. This decision sent shockwaves through the market, leading to a crisis of confidence in the sector. Silvergate Capital, a central lender to the crypto industry, said Wednesday it\'s winding down operations and liquidating its bank. The stock plunged more than 36% in after-hours trading.
Market Reaction: Crypto-Related Stocks Plummet
The fallout from Silvergate\'s collapse extended beyond the immediate liquidation of futures. Shares of crypto-related companies fell on Thursday, as the bank\'s collapse sparked a crisis of confidence in the industry. Silvergate shares were down 26 per cent while other crypto firms also experienced significant declines. This reflects the market\'s concern about the interconnectedness of the crypto ecosystem and traditional banking.
Impact on the Crypto Industry
The collapse of Silvergate, a crypto-friendly bank, will likely significantly impact the crypto ecosystem and its ties with the U.S. banking sector. Silvergate appears to have sold off billions of dollars worth of bonds at a market loss to keep up with withdrawals, which in turn meant it no longer met certain regulatory requirements. The loss of a major player like Silvergate creates a void and raises questions about the stability and future of the crypto market\'s relationship with traditional financial institutions.
Looking Ahead: Silvergate\'s Future
While the immediate impact of the Silvergate collapse is evident, the long-term implications for the crypto industry remain to be seen. The event serves as a reminder of the inherent risks associated with cryptocurrency and the importance of robust regulatory oversight.
Update: While some initial reports alluded to a much later date, the situation involving Silvergate Capital actually unfolded in early 2023, not 2025. The initial instability leading to Silvergate Capital, a crypto-friendly bank, facing severe financial losses was influenced by factors preceding a broader collapse such as FTX.