Crypto investment funds advise the project to withdraw money from Silicon Valley Bank

Crypto projects are trying to minimize the influence of Silicon Valley Bank when this US bank is rumored to be short of money.

Crypto investment funds advise the project to withdraw money from Silicon Valley Bank

According to The Blocka number of crypto investment funds have suggested that the projects in their portfolio withdraw money from Silicon Valley Bank, the US commercial bank that is rumored to be experiencing liquidity difficulties after disclosing the take out a loan to get more money, and at the same time sell the stock investment at a loss.

The list of investment funds confirms the above information with The Block including Mechanism Capital, Pantera Capital, Eden Block and two other funds, which asked to remain anonymous.

In the early morning of March 10 (Vietnam time), the US stock market and the crypto community were buzzing with the news that Silicon Valley Bank was stuck in money. The bank’s share price of SIVB has dropped by 60% in the past week. Particularly on the trading day of March 9 (US time). SIVB’s price also dropped another 60%, wiping away $80 billion in market capitalization.

Movement in share price of Silicon Valley Bank’s SIVB from November 2022 to March 2023. Source: TradingView

Silicon Valley Bank as of the end of 2022 is the 16th largest commercial bank in the US, managing assets of 209 billion USD.

The root of the problem began in 2021, the bank saw a sharp increase in customer deposits from $ 61.7 billion to $ 189 billion. To ensure profits, Silicon Valley Bank has decided to invest $80 billion in long-term mortgage-backed securities (MBS). However, when the Fed interest rate increased sharply in 2022, the value of MBS securities dropped sharply as investors in the market turned to buy US government bonds.

On March 9, Silicon Valley Bank confirmed to sell $21 billion of securities with a loss of $1.8 billion. The bank’s parent company offered to sell an additional $1.75 billion of shares, but also agreed to sell $500 million of shares to the General Atlantic fund.

Therefore, financial observers speculate that Silicon Valley Bank is facing liquidity difficulties, causing a wave of withdrawals to emerge.

Some founders of crypto projects confirm with The Block that they could not access their Silicon Valley Bank account when the bank kept reporting technical errors.

The cryptocurrency market in March also witnessed the event Silvergate Bank, a bank that specializes in providing USD trading services for many major US crypto companies, announced the shutdown and liquidation of assets to repay debts after liquidity difficulties.

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