Silvergate clearing affects or significantly affects Bitcoin trading volume

On March 9, data from CryptoQuant showed that due to the impact of Silvergate’s clearing on the market, the volume of transactions denominated in Bitcoin fell by 35% in the past 24 hours. At the same time, the total number of transactions on the Bitcoin blockchain decreased by 17% and the number of active addresses decreased by 10% in the same period.

Interpretation of this information:

The cryptocurrency market experienced a substantial decline on March 9, 2021, with Bitcoin suffering the most significant blow. CryptoQuant, the blockchain analytics platform, reported a 35% fall in the volume of Bitcoin denominated transactions within 24 hours. The decline is attributed to Silvergate’s clearing, a financial services organization that supports the cryptocurrency industry.

Silvergate is one of the top cryptocurrency banks that provides services to numerous crypto exchanges and other institutions that handle digital assets. The bank operates a real-time funding platform that allows clients to process transactions more efficiently. However, Silvergate’s clearing system went down, temporarily disrupting the cryptocurrency market, with exchanges struggling to process transactions as efficiently as they usually do. This caused a significant drop in Bitcoin transactions during this period.

Moreover, CryptoQuant also revealed that the total number of transactions on the Bitcoin blockchain decreased by 17% in the same 24-hour period. This suggests a possible reduction in overall activity across the network. Additionally, the number of active Bitcoin addresses decreased by 10%, implying a decline in the number of individuals and institutions using the network for transactions, whether trading, payments or remittances.

This particular event underscores the vulnerability of the cryptocurrency market, especially when it comes to infrastructure support. The demand for digital assets has been on the rise in recent months, with more institutions and retail investors seeking to enter the market. However, the infrastructure that supports these assets, including exchanges, wallets, and even banks, must be robust enough to withstand sudden surges in demand or any technical challenges that may arise.

The decline in Bitcoin transactions due to Silvergate’s clearing is, however, expected to be temporary. Once the system is restored, normal operations should resume. Nonetheless, it highlights the need for the cryptocurrency industry to develop and maintain robust, reliable infrastructure in the face of the increasing demand for digital assets.