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It was the third consecutive week of market-wide depreciation in 2023.
The repercussions of the announced "wind down" of Silvergate Bank were still unfolding when Silicon Valley Bank failed. Market leaders Bitcoin and Ethereum saw heavy losses, but they weren’t the only losers: virtually every leading cryptocurrency is down by double-digit percentages coming into the weekend.
The markets were first roiled by the demise of crypto bank Silvergate. The writing was on the wall last week when the bank delayed filing its annual 10-k report with the United States Securities and Exchange Commission, leading to a sustained pullback in prices throughout the previous week.
The speculation continued on Tuesday, when the White House’s press secretary said Washington was monitoring the situation. The following day, Silvergate’s parent company announced the bank was shutting operations. The news led to a market-wide selloff which sent the combined market capitalization of all cryptocurrencies back below a trillion dollars.
By that point, concerns about Silicon Valley Bank were already clogging the rumor mill.
According to CoinGecko price data, Bitcoin (BTC) is down 10.5% and is sitting right 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 No. 2 cryptocurrency by market cap, had a similar trajectory this week. It's down 9.5% over the last seven days and is starting the weekend around $1,425.
Similar losses of around 15% were posted by Polygon (MATIC), which is now worth $1.04, Polkadot (DOT) is worth $5.52, Shiba Inu (SHIB) trades at $0.00001024, Avalanche (AVAX) changes hands at $14.76, Uniswap (UNI) is worth $5.63, and Chainlink (LINK) trades at $6.20.
The steepest losses this week (around 20% or more) were posted by Filecoin (FIL), which is currently worth $5.30, OKB trades at $39.74, Solana (SOL) changes hands at $17.74, and Dogecoin (DOGE) trades at $0.065269.
Regulators talk risk, environment, and the Digital Dollar
U.S. regulators were also in the spotlight this week as they aired their concerns about crypto.
On Monday, Federal Reserve Chairman Jerome Powell told lawmakers on Capitol Hill that while the U.S. central bank doesn’t want to stifle innovation, regulated financial institutions must take “great care” when engaging with the crypto space due to the prevalence of fraud and the lack of transparency in the space.
Elsewhere on Capitol Hill that day, the U.S. Senate chaired what lawmakers have called the first-ever hearing on crypto mining’s environmental footprint. Senator Ed Markey (D-Massachusetts) led the session of the Committee on Environment and Public Works, and said that mining “deserves the spotlight” because it is “extremely energy-intensive” and enables the creation of “heavily-concentrated wealth.”
Markey is also the sponsor of a bill pushing for more transparency from miners regarding their environmental impact.
On Wednesday, U.S. Congressman Stephen Lynch (D-MA) questioned Jerome Powell as the latter testified before the House Financial Services Committee. Lynch asked Powell whether a tokenized version of the U.S. dollar would wipe out other cryptocurrencies.
Powell replied that he “never understood the valuation of [cryptocurrencies]” and argued that they “don't have any intrinsic value, but nonetheless, trade for a positive number.” He refrained from speculating on the impact of a digital dollar.
That 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 chair Gary Gensler, who has repeatedly made clear he sees all cryptocurrencies except Bitcoin as securities.
Finally, at 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) Thursday, arguing the concept was an affront to American values of privacy, individual sovereignty, and free markets.
“As the federal government seeks to maintain and expand the financial control to which it has grown accustomed to, the idea of the central bank digital currency has gained traction within the institutions of power,” Emmer said. “I'm confident that American values will always prevail against the power-hungry whims of unelected bureaucrats.”