Bitcoin and other cryptocurrencies tried to recover from the previous day’s huge losses on Friday, as investors worried about the sudden collapse of Silicon Valley Bank (SVB), closely linked to the technology sector.
On Friday, bitcoin, the world’s most valuable cryptocurrency, dropped by 6.2 percent, bottoming at $19,549. Later, it partially recovered and climbed slightly above $20,000.
On Thursday, Ethereum, the largest altcoin by market value in the world, experienced a 6.2 percent drop before rebounding to $1,422 on Friday, according to Anadolu Agency. This return puts Ethereum at $1,368, significantly improving from its prior position.
The price of some altcoins fell by more than 10 percent during that period. The total value of the crypto market fell to $912B, from just over a trillion, during the same period, posting a loss of approximately $90B, according to data from the digital asset price tracking website CoinMarketCap.
The rapid sell-off in cryptocurrencies came after investors sensed fear and uncertainty in the tech sector over the sudden collapse of SVB.
Although SVB sold its $21B bond portfolio at a loss of $1.8B, the statement said the bank’s exposure to cryptocurrencies is minimal.
The SVB closed: The biggest bankruptcy since 2008
SVB closed on Friday, the biggest collapse of a major American bank since 2008, when Washington Mutual collapsed at the height of the global financial crisis.
The US Federal Insurance Corporation seized SVB’s assets. The bank collapsed after its customers, mainly IT workers and venture capital companies began withdrawing their money, creating a general rush, Beta reports.
The technology industry heavily influences Silicon Valley, and there is little chance of a “contagion” through the banking sector, as it was in the months leading up to the global financial crisis, or Great Recession, over 15 years ago. Big banks now have enough capital to avoid a similar situation.
The Federal Insurance Corporation ordered the closure of SVB and took over all its deposits. At its collapse, the bank had assets worth $209B and $175.4B in deposits, the Federal Corporation said.
