This week in pieces: After the collapse of Silvergate and the Silicon Valley bank, Bitcoin and Ethereum crashed

This week in parts. Illustration by Mitchell Preffer for Decrypt.

It was the third consecutive week of market-wide depreciation in 2023.

The repercussions of the announced “liquidation” of Silvergate Bank were still being felt when Silicon Valley Bank failed. Market leaders Bitcoin and Ethereum posted heavy losses, but they weren’t the only losers: virtually all major cryptocurrencies fell by double-digit percentages heading into the weekend.

The markets were initially shaken by the disappearance of the crypto-bank Silvergate. The writing was on the wall last week when the bank delayed filing its 10-k annual report with the U.S. Securities and Exchange Commission, resulting in a retreat in prices throughout the previous week.

Speculation continued on Tuesday, when the White House press secretary said Washington was monitor the situation. The next day, Silvergate’s parent company announced that the bank was closing operations. The news led to a market-wide liquidation which returned the combined market capitalization of all cryptocurrencies below a trillion dollars.

By then, concerns about Silicon Valley Bank were already clogging the rumor mill.

According to price data from CoinGecko, Bitcoin (BTC) is down 10.5% and just sitting at the $20,000 support level at the start of the weekend. It’s at $20,055 at the time of writing.

Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, experienced a similar trajectory this week. It is down 9.5% in the past seven days and starts the weekend around $1,425.

Similar losses of around 15% were recorded by Polygon (MATIC), which is now worth $1.04, Polkadot (DOT) is worth $5.52, Shiba Inu (SHIB) is trading at $0.00001024, Avalanche ( AVAX) is changing hands at $14.76, Uniswap (UNI) is worth $5.63, and Chainlink (LINK) is trading at $6.20.

The largest losses this week (about 20% or more) were recorded by Filecoin (FIL), which is currently worth $5.30, OKB is trading at $39.74, Solana (SOL) is changing hands at 17, $74 and Dogecoin (DOGE) is trading at $0.065269.

Regulators talk about risk, the environment and the digital dollar

US regulators were also in the spotlight this week as they voiced concerns about crypto.

On Monday, Federal Reserve Chairman Jerome Powell told lawmakers on Capitol Hill that if the U.S. central bank is not to stifle innovation, regulated financial institutions must take “great care“when engaging with the crypto space due to the prevalence of fraud and lack of transparency in the space.

Elsewhere on Capitol Hill that day, the US Senate presided over what lawmakers called the first-ever hearing on the environmental footprint of crypto mining. Sen. Ed Markey (D-Massachusetts) led the session of the Environment and Public Works Committee, and said mining “deserves the spotlight” because it is “extremely energy-intensive” and allows for the creation of “highly concentrated wealth”.

Markey is also the sponsor of a bill pushing for more transparency from miners about their environmental impact.

On Wednesday, US Congressman Stephen Lynch (D-MA) questioned Jerome Powell as the latter testified before the House Financial Services Committee. Lynch asked Powell if a tokenized version of the US dollar would eliminate other cryptocurrencies.

Powell replied that he “never understood valuation of (cryptocurrencies)” and argued that they “have no intrinsic value, but nevertheless, trade for a positive number”. He refrained from speculating on the impact of a digital dollars.

On the same day, Rostin Behnam, chairman of the Commodities and Futures Trading Commission (CFTC), told the Senate Agriculture Committee that Ethereum is a commodity. The CFTC is considered one of the most likely regulators of crypto, alongside the SEC, but Benham’s opinion is at odds with SEC Chairman Gary Gensler, who has repeatedly made it clear that he considers all cryptocurrencies, except Bitcoin, as securities.

Finally, during a panel hosted by the Cato Institute on Thursday, Republican House Majority Whip Tom Emmer (R-MN) warned against a central bank digital currency (CBDC) on Thursday, arguing that the concept was an affront to American values ​​of privacy, individual sovereignty and a free market.

“As the federal government seeks to maintain and expand the financial control it has become accustomed to, the idea of ​​central bank digital currency has gained traction within institutions of power,” Emmer said. “I am confident that American values ​​will always prevail against the power-hungry whims of unelected bureaucrats.”

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