The value of Dogecoin (DOGE) in the cryptocurrency market has dropped due to widespread fear, uncertainty, and doubt following the collapse of Silicon Valley Bank on Friday. The bank’s failure, caused by a bank run and capital crisis, resulted in the second-largest financial institution failure in US history.
The market capitalization of major meme tokens has dropped by almost 11% in the past 24 hours, triggered by the collapse of Silvergate, a bank that was supportive of cryptocurrencies. In addition, the surge in DOGE’s trading volume by nearly 30% suggests a significant market sell-off may be imminent.
As of writing, DOGE’s trading price was at $0.0640, which signifies a decrease of 21% over the past seven days. Furthermore, according to Coingecko, the cryptocurrency market tracker, DOGE has lost 11% of its value in the past 24 hours alone.
Over the past 30 days, the meme token has experienced a decline of 31%, while over the past two weeks, it has fallen by 24%. Since the start of 2023, the token has only seen a slight increase of 2%.
At the time of writing, Bitcoin, which has the highest market capitalization among cryptocurrencies, had experienced a drop in price from the $21,000 level and was trading at $20,372. As a result, BTC investors are preparing for the next phase of the ongoing Silicon Valley Bank crisis.
DOGE’s macroeconomic uncertainty is caused by its speculative nature and absence of fundamental value. Its value is primarily influenced by the demand from investors and traders, which makes it unpredictable and vulnerable to sudden changes in market sentiment.
The decline of Silicon Valley Bank was partly attributed to the Federal Reserve’s aggressive increase in interest rates over the past year. Banks had accumulated long-term Treasuries that were perceived as low-risk when interest rates were close to zero.
While the Federal Reserve increased the interest rates to regulate inflation, the value of these investments decreased, leading to unrecognized impacts for financial institutions.
Regardless, the meme coin’s twenty-four-hour trading capacity has returned to 681 million dollars, up one hundred and three percent, creating bustling market actions that can smoothly transform into profits when appropriate.
Potential Impact of Silicon Valley Bank’s Collapse
Conversely, the SHIB community has a reason to rejoice as Shibburn reported a remarkable increase of 36,497.56% in the burn rate of their beloved meme coin. The latest increase in the burn rate of the cryptocurrency SHIB may be attributed to the upcoming launch of Shibarium Beta, a layer-2 blockchain.
The outcome of the Shibarium launch may depend on the extent of damage caused by Silicon Valley Bank’s collapse, how it impacts investor sentiment and the level of anticipation surrounding the launch.
Possibilities of Further Turmoil in the Crypto Market
Some analysts are predicting additional turbulence for the cryptocurrency industry in light of the collapse of Silicon Valley Bank and the circulation of FUD (fear, uncertainty, and doubt) regarding unknown risks in the financial and banking sectors.
According to Christopher Whalen, the chairman of Whalen Global Advisors, whom Reuters quoted, there may be a significant downturn in the market next week, as short sellers are expected to target every bank, particularly the smaller ones.
Despite the high market activity surrounding SHIB, larger addresses have begun to sell their holdings, decreasing the number of transactions involving whale accounts.
Meanwhile, analysts are monitoring the unfolding developments related to Silicon Valley Bank and how it could affect the price of Dogecoin in the upcoming days.