It is a dark season for crypto traders as they suffer huge losses of about $307 million in the last 24 hours due to liquidations.
According to data from Coinglass, this occurred after the crypto markets crashed on Thursday due to news of Silvergate Capital, a crypto-friendly bank, winding down its operations.
Binance, the world’s largest crypto exchange, saw the highest losses at $104 million, followed by OKX at $79 million and Huobi at $45 million. The majority of the losses were experienced by Bitcoin traders at $112 million, with Ethereum traders following at $73 million in liquidations.
US-based lender Silvergate to shut down operations due to customer withdrawals after the crypto exchange FTX’s collapse. The lender, which focused on cryptocurrency, was unable to sustain its business amid the aftermath of the collapse.
Last week, the California bank, Silvergate, had warned that it was not well-capitalized after depositors demanded their money back. The bank said it was considering whether it could continue operating adding that it was under investigation by the US Department of Justice for quite some time.
Following this liquidation process, the bank suffered a loss of $1 billion in the fourth quarter of 2022, as investors withdrew over $8 billion in deposits. In order to cover the cost of these withdrawals, the bank had to sell assets and incur losses.
Several of Silvergate’s partners, including Coinbase and Galaxy Digital, ended their business relationships with the bank. FTX and its affiliated trading arm, Alameda Research, were among the companies that held accounts with Silvergate
The recent losses suffered by crypto traders due to liquidations have significant implications on the crypto space and its traders.
This event highlights the inherent volatility of the crypto market, where sudden shifts in market sentiment can lead to massive losses for traders. It also underscores the importance of risk management and caution in trading cryptocurrencies.
Furthermore, the collapse of Silvergate Capital, a crypto-friendly bank, and subsequent liquidation of its assets indicates the challenges facing the crypto industry. The incident could lead to greater scrutiny and regulation of the sector, which could impact the growth and adoption of cryptocurrencies.
Overall, this event serves as a reminder that the crypto space is not immune to market shocks, and traders should exercise caution and due diligence in their investments.
It also highlights the need for the development of more robust and secure financial infrastructure to support the growth of the crypto market
In conclusion, the recent liquidations and losses incurred by crypto traders due to the collapse of Silvergate Capital is not the first incident of its kind in the crypto space.
The industry has witnessed similar events in the past, highlighting the volatility and risks associated with trading cryptocurrencies. While the incident underscores the need for caution and risk management, it also presents an opportunity for the development of more robust and secure financial infrastructure to support the growth and adoption of cryptocurrencies.
As the crypto industry continues to evolve and mature, it is essential for traders and investors to stay informed and exercise diligence to navigate the challenges and opportunities presented by this emerging market.
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