David - Cryptocurrency Specialist
The Ascending Channel Support Level Breaks as Silvergate Bank Crisis Takes Hold
FTX's Bankruptcy and Massive Shortfall Lead to $8.6 Billion Deficit
EOS, IMX, and DYDX Performances in the Crypto Market Investment
Balanced Leverage Demand Despite Recent Price Correction
Options Put/Call Ratio Reflects Traders' Optimism
The total crypto market capitalization experienced a sharp sell-off on March 2, slipping below $1.025 trillion due to concerns over the solvency of Silvergate Bank, a major player in crypto on- and off-ramping. The bank's announcement of "additional losses" and suboptimal capitalization potentially triggered a bank run, leading clients to seek alternative solutions or sell their positions to reduce exposure in the crypto sector.
The ascending channel support level initiated in mid-January saw its $1.025-trillion market cap floor ruptured after Silvergate Bank's stock plunged by 57.7% at the New York Stock Exchange on March 2. This led to a 6.3% price correction, breaking below the ascending channel support level.
Moreover, FTX, a bankrupt cryptocurrency exchange, revealed a "massive shortfall" in its crypto assets and fiat currency holdings, leading to a $8.6 billion deficit across all wallets and accounts, while FTX US recorded a deficit of $116 million. This also contributed to the 4% weekly decline in total market capitalization since Feb. 24, which was driven by the 4.5% loss from trusted Bitcoin and Ether's 4.8% price decline.
Despite the recent price correction, the leverage demand remains balanced, with perpetual futures contracts reflecting a slightly higher demand for betting against BNB's price at 0.2% per week. Meanwhile, the options put/call ratio reflects traders' optimism, with the demand for bullish call options exceeding the neutral-to-bearish puts since Feb. 25.
In terms of individual cryptocurrency performances, EOS gained 9% after the EOS Network Foundation announced the final testnet for the Ethereum Virtual Machine launch on March 27. Immutable X (IMX) also traded up 5% as the project became a "Unity Verified Solution," allowing seamless integration with the Unity SDK. However, DYdX (DYDX) traded down 14.5% as investors await a $17-million token unlock on March 14.
From a derivatives market perspective, the market showed resilience, and crypto traders may not expect additional corrections despite the bearish indicator from the failed ascending channel. The 4% weekly decline in total market capitalization reflects the uncertainty brought by Silvergate Bank, and it is unlikely to have roots deep enough to cause systemic risk.
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