Silvergate Collapse Pull Down Bitcoin Volume

Silvergate Collapse Pull Down Bitcoin Volume

CryptoQuant data shows that transfer volume, denominated in BTC, has decreased by 35% over the past 24 hours. At the same time, the total number of transactions on the Bitcoin blockchain decreased by 17% over the same time period, and the number of active addresses decreased by 10%.

For the month of March, bitcoin trading volume averaged about $25 billion, according to data from CoinGecko, versus about $36 billion for February.

“Besides the drop in the price of bitcoin, we saw a significant drop in trading volumes as well, across the ecosystem when news broke about Silvergate’s financial difficulties,” said Gilhem Chaumont, CEO of market maker and brokerage Flowdesk in Paris. CoinDesk’s note.

Silvergate has been one of the most important fiat payments in the cryptocurrency market, providing traditional banking services to exchanges and market makers. As such, trading volumes have dwindled since Silvergate’s problems became public.

Trading has been quiet since then, Chaumont said, and notes that the first shock has been priced in as traders digest the situation.

“It certainly feels like the ‘calm before the storm.’ So the market isn’t getting away with it — FTX has made us very aware that anything can happen.” “However, the situation could still go either way – which means that if news of a reassuring decision emerges, the confidence that characterized the first two months of 2023 could return.”

The demise of Silvergate may accelerate the shift towards trading pairs denominated in dollar-pegged stablecoins such as Tether (USDT).

“With the death of Silvergate, stablecoins are likely to become more mainstream among traders. Instead of depositing your dollars on an exchange, you deposit them with a stablecoin issuer, receive stablecoins and then transfer them to an exchange,” crypto data provider Caico said in a note on Monday.

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Most of the trading volume is already concentrated in USDT pairs. Data tracked by Kaiko shows that BTC/USDT pairs account for over 90% of trading volume, up from 3% in 2017.

At the same time, the number of new USDT-crypto pair listings decreased.

Daily USDT volume is currently $32.3 billion per day so far in March, according to CoinGecko data, down from an average of $47 billion per day during February.

Omkar Godbolly contributed to this report.

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