Why we aren't talking about Silvergate?

It’s no secret that Silvergate is one of the leading financial institutions that provides banking services to cryptocurrency businesses. But what would happen if Silvergate goes under? Well, the consequences would be catastrophic for the entire cryptocurrency market. Let’s take a closer look at what would happen and why.

Firstly, if Silvergate were to go under, it would reduce liquidity in the market. This is because many cryptocurrency exchanges, brokerages, and trading platforms rely on Silvergate to provide liquidity for their customers. Without Silvergate’s banking services, these entities would have to find alternative sources of liquidity, which could be challenging, time-consuming, and costly.

Secondly, the lack of liquidity would create a significant sell pressure on Bitcoin and other cryptocurrencies. This is because traders and investors would be forced to sell their holdings to raise cash, which could trigger a sharp decline in prices. The sell pressure could be further exacerbated by the fact that many traders and investors use leverage to amplify their returns. Without adequate liquidity, they would be unable to exit their positions, which could result in a cascade of forced selling.

Thirdly, the failure of Silvergate could lead to a loss of confidence in the cryptocurrency market. This is because Silvergate is one of the few financial institutions that has embraced the cryptocurrency industry and has actively sought to provide banking services to cryptocurrency businesses. If Silvergate were to go under, it would be a significant blow to the credibility and legitimacy of the cryptocurrency market.

Finally, the failure of Silvergate could also lead to regulatory backlash against the cryptocurrency industry. This is because regulators may view the collapse of a major financial institution that serves the cryptocurrency market as evidence of the risks and dangers associated with the industry. This could result in increased scrutiny, tighter regulations, and greater barriers to entry for new businesses.

The failure of Silvergate would be a major blow to the cryptocurrency market. It would reduce liquidity, create significant sell pressure, undermine confidence, and potentially trigger regulatory backlash. While it’s impossible to predict the future with certainty, it’s essential that cryptocurrency businesses, traders, and investors take the potential risks seriously and prepare accordingly.