The cryptocurrency market has reduced the value of Dogecoin (DOGE) as a lot of fear, uncertainty, and doubt crossed the market after the Silicon Valley Bank collapsed on Friday morning as a result of the bank run and the resulting capital crisis. the second largest failure of a financial institution in the history of the United States.
The collapse of crypto-friendly bank Silvergate has also triggered a market sell-off with the top meme token’s market cap down nearly 11% in a 24-hour period. DOGE’s trading volume increased by almost 30%, indicating an upcoming market sell-off.
At the time of writing, DOGE is trading at $0.0640, representing a 21% decline over the last seven days. Additionally, data from crypto market tracker Coingecko shows that the dog-themed coin has lost 11% of its value in the last 24 hours.
The meme token has dropped 31% in the past 30 days and 24% in the past two weeks, with only a 2% increase since the start of 2023.
For its part, Bitcoin – the largest crypto in terms of market cap – saw its price drop from the $21,000 level, trading at $20,372 at the time of writing as BTC investors prepare for the next episode in the ongoing crisis at Silicon Valley Bank.
The macroeconomic uncertainty surrounding DOGE is due to its highly speculative nature and lack of fundamental value. Its value is driven by demand from investors and traders, so it is unpredictable and subject to changes in sentiment.
Failed Silicon Valley Bank Drags Down DOGE
But the current price drop in DOGE can largely be attributed to the sudden implosion of Silicon Valley Bank.
Silicon Valley Bank’s decline was partly due to the Federal Reserve’s interest rate hike the previous year.
SVB stocks dropping. Image: WSJ
Banks have been accumulating long-term Treasuries that appear to be low risk when interest rates are close to zero.
However, when the Fed tightens interest rates to manage inflation, the value of these investments falls, causing unrealized losses for banks.
Despite this, DOGE’s 24-hour trading volume has returned to $681 million, up 103%, generating a flurry of market activity that can easily translate into profits when conditions are right.
Image: Watcher Guru
Will SVB Implosion Impact Shibarium Launch?
On the other hand, the SHIB army has reason to celebrate as the burn rate of their favorite meme coin increased by 36,497.56%, as reported by Shibburn.
The upcoming release of the Shibarium Beta layer-2 blockchain could lead to a new surge in the rate of crypto burning.
However, how this happens may depend on the collapse of SVB and how it affects investor sentiment and the excitement surrounding the launch of Shibarium.
Crypto total market cap currently at $915 billion on the daily chart | Chart: TradingView.com
More Pain For The Crypto Market?
Meanwhile, some market observers are now expecting more pain for the crypto sector after the failure of Silicon Valley Bank and the spread of FUD about hidden risks in the financial and banking sector in general.
Christopher Whalen, chairman of Whalen Global Advisors, said in a quote by Reuters:
“Next week there may be some bleeding […] Short sellers are out there and will attack every bank, especially the smaller ones.
While SHIB continues to generate lively market activity, larger addresses have begun to unload their assets, resulting in a decrease in the number of whale transactions.
Meanwhile, analysts keep an eye on the next development in Silicon Valley Bank – and how it can impact the price of Dogecoin in the coming days.
-Featured image from Mental Floss