Signature Down 22.87% As Two Banks Go Down In As Many Days
A tumultuous week for US banks saw the shares of the crypto-friendly Signature Bank drop nearly 23% on Friday and more than 37% since Monday. The decline comes after the second large bank catering to digital assets companies—Silvergate—announced it is closing its doors, and after Californian regulators shut down America’s 18th largest bank, Silicon Valley Bank.
Signature Bank Down 22.87% At Friday’s Close
The crypto-friendly Signature Bank saw its shares decline 22.87% in Friday trading and drop to $70. The day’s decline, along with the greater fall of 37.30% since Monday, is reflective both of the current concern for digital asset-friendly banks, and the worries for banks more broadly stemming from recent events.
Only two days earlier, on Wednesday, Silvergate Capital Corporation announced it would be winding down its operations and voluntarily liquidating its Silvergate bank as a result of the widespread issues that originated primarily with the downfall of FTX. The situation for banks in the US was further worsened earlier on Friday when Californian regulators stepped in and closed the Silicon Valley Bank in what is now considered the largest failure of an FDIC-insured institution since the financial crisis of 2008.
The general unease was also demonstrated on Wednesday, March 8th, when reports stating that JP Morgan Chase, one of America’s largest banks, decided to end its relationship with the Winklevoss twins’ Gemini Trust started circulating the web. The news was quickly denied meaning that the banking giant’s cooperation with Gemini and Coinbase which started in 2020 remains intact for the time being.
Join our Telegram group and never miss a breaking digital asset story.
Crypto’s Growing Banking Crisis
While the drop in the share price of Signature isn’t necessarily indicative of a failure to come, it can be seen as worrying considering the growing scarcity of banks willing to cooperate with cryptocurrency companies. While the bank has been downsizing its exposure to digital assets, it remains an important partner for some major exchanges, especially after Coinbase decided to replace its relationship with Silvergate with one with Signature last week.
Furthermore, the Friday closing of Silicon Valley Bank is already causing some worries that the digital assets industry is bound to take another big hit. The latest published attestation of the Circle revealed that an undisclosed of its $9 billion reserve used to back its stablecoins was held at SVB. The concerns had an impact on Coinbase’s share prices which dropped 8% on Friday due to the exchange’s reliance on USDC, a stablecoin which is a joint venture of Circle and the exchange.
Furthermore, while the Silicon Valley Bank’s primary focus was venture capital firms, its connectedness to the cryptocurrency industry was again highlighted later on Friday afternoon when it was highlighted that BlockFi held $227 million worth of mostly uninsured funds with it. The revelation quickly caused concerns it may further complicate the bankruptcy of the company that went under less than a month after FTX becoming the first major victim of the contagion.
Do you think the SVB contagion could prove damaging to the cryptocurrency industry? Let us know in the comments below.