• Silicon Valley Bank is facing huge liquidity issues due to historically fast interest rate hikes in the U.S.
• The potential collapse of Silicon Valley Bank poses a significant risk to the crypto industry, especially crypto-friendly venture capital (VC) firms.
• Some crypto VCs have already advised their portfolio companies to withdraw funds from the troubled bank.
Silicon Valley Bank’s Troubles
Silicon Valley Bank, a top 20 bank in the U.S. with about $200 billion in assets under management (AUM), is experiencing a liquidity shock due to historically fast interest rate hikes in the U.S.. The bank, known for its dominance in the U.S. startup world, announced a $1.75 billion stock offering this week and a $500 million common stock purchase by private equity firm General Atlantic to shore up its balance sheet.
What it Means for Crypto
The potential demise of Silicon Valley Bank would mean serious trouble for the U.S. startup landscape including crypto companies as Silicon Valley Bank is one of the most crypto-friendliest banks in the world that provides banking services to prominent crypto-focused venture capital firms such as Sequoia and Andreessen Horowitz (a16z).
Reactions from Crypto VCs
Some crypto VCs have already started sounding alarm bells about Silicon Valley Bank and have advised their portfolio companies to withdraw funds from the troubled bank such as Mechanism Capital, Eden Block, Pantera Capital, and other VCs .
The market reacted heavily negatively to news of SVB’s troubles; shares went down 60% on Thursday and are down another 62% on Friday’s premarket session according to data from Yahoo! Finance with SVB trading at $39.49 per share currently . Furthermore some users report not being able to log into their accounts anymore .
The potential collapse of Silicon Valley Bank could be catastrophic for both investors and startups alike; however there may still be hope if enough investors come together or if further measures can be taken by banks or governments around the world .