Bitcoin and ether down; Silvergate plunges 40%

Crypto prices steadied while stocks tied to digital assets sank on ratings news and financial results. 

Bitcoin was trading at roughly $16,800 by 1 p.m. ET, down 0.3%, according to TradingView data. 

BTC/USD chart by TradingView

Ether was hovering around $1,240, down by about 0.8%, while altcoins like Polygon’s MATIC and Ripple’s XRP also fell by 2.4% and 2.7%, respectively.

Crypto Stocks

The S&P 500 and Nasdaq 100 were both off by more than 1%.

Silvergate took a beating, slumping 43% after announcing job cuts and an $8.1 billion drop in deposits in the fourth quarter  amid a “crisis of confidence across the ecosystem.” 

Crypto exchange Coinbase fell 8.5%. Cowen downgraded the stock earlier today, but Needham’s John Todaro noted that trading volume declines have likely mostly been digested by the market, given those numbers are already out there.

“In our view the bigger reaction is in regards to Silvergate seeing $8 billion in withdrawals and cutting 40% of its workforce. Silvergate has been a key infra provider for exchanges and the issues there are reverberating throughout the industry, including to COIN,” the vice president of crypto asset and blockchain research said. “In light of FTX, Celsius, and Voyager, investors have been very keen on contagion risks so any issues with one company weighs on the whole industry, especially liquid public companies.”.

MicroStrategy shares fell 5.2%, while Galaxy Digital was down by 6.3% and Block by 1.7%.

Silvergate chart by TradingView

Macro matters

The Federal Open Market Committee (FOMC) — which decides U.S. central bank policy — published minutes on Wednesday from its Dec. 13-14 meeting. The minutes reiterated the Fed’s commitment to fighting inflation. 

The Fed’s next interest rate decision is slated for Feb. 1, with a 25 basis point increase widely expected. The CME’s FedWatch tool — which uses 30-Day Fed Funds futures pricing data to predict probabilities — showed a 56% chance of a 25 basis point increase prior to the release. 

The target probability of a 25 basis point increase fell from 70% prior to the release of the Fed’s meeting minutes yesterday. 

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