Main Worrisome Events That Led Global Crypto Market Cap Collapses Below $1T

The last time the global market capitalization for cryptocurrencies traded below the $1 trillion mark was late January.

The global crypto market capitalization has slipped below the $1 trillion mark for the first time since late January. The global market cap plummeted by 9.5% from the value of $1.01 trillion this Wednesday to a two-month low of $914 billion on Friday. This was as a result of an extensive bloodbath triggered by certain worrisome events. 

Silvergate’s Bankruptcy 

Silvergate Capital, the parent company of the crypto-focused Silvergate Bank, announced on Wednesday that the bank would cease operations and file for bankruptcy, citing exposure to FTX. The disclosure came shortly after the bank delayed its annual 10-k filing with the SEC. 

KuCoin Lawsuit and ETH’s Security Label

Another concerning event is the lawsuit against prominent exchange KuCoin. New York Attorney General Letitia James leveled charges against the exchange on Thursday, alleging that it offered unregistered securities to New York residents.

The Attorney General alleged that assets such as Ethereum (ETH), which are offered by KuCoin, are classified as securities. Concerns emerged, as this could set a precedent for ETH and other crypto assets to be labelled as unregistered securities across the U.S.

Huobi Token’s Flash Crash

On Thursday, Huobi Token, the native token of the Huobi exchange, plummeted by over 90% in a flash crash event that got investors talking. As highlighted by DB, the asset sank to a low of $0.91 briefly before recovering.

Voyager’s Selloffs

As previously reported, bankrupt lender Voyager has been persistently selling off millions of assets since the start of the year despite the go-ahead given to Binance to acquire its assets. The lending firm has liquidated $358 million worth of assets since January.

Silicon Valley Bank’s Implosion 

In addition, Silicon Valley Bank (SVB), one of America’s largest banks, collapsed on Friday following a bank run triggered by investor concerns. 

Circle, the issuer of USDC, disclosed earlier today that it has a $3.3 billion exposure to SVB. The assets represent 8% of its $40 reserves. 

Binance had revealed that it would suspend auto-conversion of USDC to BUSD, citing market conditions. The exchange further disclosed that it has no exposure to SVB. Coinbase also decided to temporarily suspend USDC/USD conversions. 

Shortly after these disclosures, USDC depegged from the dollar, collapsing to an all-time low of $0.87 at 07:00 (UTC). Despite a slight recovery, the asset is still trading below the dollar, currently changing hands at $0.90, with a 9.48% decline.

Besides Circle, bankrupt crypto lender BlockFi disclosed a $227 million exposure to SVB in a recent bankruptcy filing. Fox Business journalist Eleanor Terrett also revealed that leading venture capital firm a16z had SVB as a banking partner. The firm has neither confirmed nor denied exposure to SVB.