Late last year, Silvergate (SI) received $4.3 billion from the Federal Home Loan Bank of San Francisco. Silvergate needed the cash to shore up its liquidity. Customers withdrew funds at a rapid pace. It needed the government agent as a lender of last resort.
The assistance helped Silverate meet deposit demand. This also stabilized the cryptocurrency market, especially Bitcoin and Ethereum. A rising tide lifts all boats. Dogecoin, BNB, XRP, and Cardano are among the cryptocurrencies that rose in the last week.
$8 Billion Withdrawn from Silvergate
Silvergate said it cut 40%, or 200 people, of its staff on Jan. 5. It took a $718 million loss on assets it needed to sell to meet the $8.1 billion in withdrawals.
Stability
Investors who hold crypto on platforms are appreciating the importance of Federal support for stability. Without liquidity available during the mass panic, a digital bank run would create chaos in the sector.
Ethereum gained around $200 to around $1,500. Bitcoin added over $3,500. These are prices not seen since Nov. 2022. Still, these most popular coins have a history of falling quickly after an immense rally. The platforms require big investors to keep their deposits on the exchange. It takes only a few holders to transfer out large deposits for BTC and ETH prices to fall.
