Shares of crypto-focused companies fell on Thursday in premarket trading after Silvergate Capital Corp disclosed plans to wind down operations and voluntarily liquidate, as the aftermath of FTX’s implosion last year reverberates through the industry.
The crypto lender’s shares slumped 45 per cent to $2.86, a day after hitting a record low and losing 64 per cent since the company flagged a going concern risk on March 1. Shares of Signature Bank, which uses blockchain technology, fell 9 per cent.
Crypto exchange Coinbase Global, which severed ties with the bank last week, dropped 3 per cent. Miners Riot Blockchain and Marathon Digital slid 3.5 per cent and 4 per cent, respectively.
Bitcoin steadied near at $21,647, its lowest since mid-February, with analysts and investors saying the market impact of the news was limited as it had been widely expected.
Silvergate’s announcement also adds to a list of high-profile collapses of crypto market players since last year.
With Silvergate shares down 95 per cent over the past 12 months, and 72 per cent so far this year, shorting has been a profitable trade for bearish investors.
Nearly 85 per cent of the company’s free float is under short position with short sellers making $241 million in year-to-date mark-to-market profits, an 81.9 per cent increase on an average short interest of $294 million, analytics firm S3 Partners said on Monday.