By Geoffrey Smith
Investing.com — Bitcoin and other cryptocurrencies slid to their lowest in two months on Friday as the collapse of Silvergate Capital (NYSE:SI) left exchanges and investment platforms scrambling for alternative places to park their cash reserves.
By 08:15 ET (13:15 GMT), Bitcoin was down 7.6% at $19,970, while Ethereum was down 9.4% at $1,396. Other alternative coins were also down sharply as liquidity in the space came under increasing pressure.
Silvergate, which offered banking services to some of the U.S.,’s biggest crypto exchanges and platforms. had said on Wednesday it would cease trading and liquidate its remaining assets. It had suffered catastrophic losses on bonds that it was forced to sell as its crypto clients demanded cash to meet client redemptions in the wake of FTX’s collapse in November.
There is no obvious immediate substitute for Silvergate. Signature Bank (NASDAQ:SBNY), a U.S.-regulated entity, had been an active counterparty with the sector in the past but had already signaled it wanted to reduce its exposure, even before this week’s events. It put out a strongly-worded statement on Thursday reiterating its determination to wind down that part of its business. However, its stock still fell over 12% in premarket Friday.