Earlier today I noted that it was impressive the bitcoin was down only around 1% despite the wind-down of Silvergate. I spoke too soon.

Bitcoin is now down 6% as it gets sucked lower in the broad rout in risk assets. Technically, the break below the February lows isn't pretty.

Bitcoin daily chart

There's a bit of support at the Jan 18 low of $20,380 and more at the big figure but that isn't much to put a trade on with.

What has people rattled in the bigger picture is the US financial sector and this is one line of thought:


If you look down the list of names, there's some west coast pain there. Obviously, Silvergate isn't taking down the broader market, that's ridiculous. For Silicon Valley Bank, I'm a bit more open to the idea. It's a venture capital-focused bank and that business is having a terrible hangover after two years of excess but it's still a $6B market cap bank; that isn't taking down the financial system. Is its capital raise a sign of stress elsewhere?

Reuters says this:

A crucial lender for early-stage businesses, SVB is the banking partner for nearly half of U.S. venture-backed technology and healthcare companies that listed on stock markets in 2022.

I don't like the sound of that. The problem is that the bank isn't the bag holder here, it only holds the cash deposits as they move from VC to the companies. Obviously the companies are burning cash but something else has gone wrong with the company doing a $1.75B capital raise via a stock sale. Is the market worried there's something bigger in play?

Here's a trader cited by Reuters:

"The Silicon Valley raise got everybody nervous about people's capital levels and what deposits are doing. A lot of institutional investors don't feel great about owning certain banks right now," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York. "It just gets people freaked out because Silicon Valley, historically has been a very strong, well-run bank. If they're having issues right now, people are wondering what about other banks that are lesser quality and that don't have the reputation that Silicon Valley Bank has."

But go back to that bolded line and remember that 2022 was a poor year for IPOs so there weren't many technology or healthcare new listings and any company that's worth owning wouldn't have IPOed last year.

The whole saga is worth watching closely but for now this looks like a panicky market ahead of non-farm payrolls that stretching for answers.