- Silicon Valley Bank Collapse: The collapse of crypto-friendly Silicon Valley Bank on Friday morning caused a bank run and capital crisis resulting in the second-largest failure of a financial institution in US history.
- Impact on Dogecoin (DOGE): The cryptocurrency market saw a decline in DOGE’s value as fear, uncertainty, and doubt swept across the market. The trading volume of DOGE has surged by 30%.
- Macroeconomic Uncertainty Surrounding DOGE: Due to its highly speculative nature and lack of fundamental value, the value of DOGE is largely driven by demand from investors and traders making it unpredictable.
Background: Silicon Valley Bank Collapse
The collapse of crypto-friendly Silicon Valley Bank on Friday morning caused a bank run and capital crisis resulting in the second-largest failure of a financial institution in US history. Additionally, data from crypto market tracker Coingecko shows that the meme token Dogecoin (DOGE) has lost 11% of its value in the last 24 hours alone. The response from Bitcoin – the biggest crypto by market cap – was also subdued with its price falling from $21,000 to $20,372 at time of writing.
Dogecoin (DOGE) Price Crash
The cryptocurrency market saw a decline in DOGE’s value as fear, uncertainty, and doubt swept across the market. At time of writing, DOGE was trading at $0.0640 indicating a 21% decline in the last seven days. Trading volume for Dogecoin has surged by almost 30%, hinting at an impending intense sell-off. Furthermore, data from crypto market tracker Coingecko shows that the meme token has declined 31% over last 30 days and 24% over last two weeks with only 2% increase since beginning 2023.
Macroeconomic Uncertainty Surrounding Dogecoin (DOGE)
Due to its highly speculative nature and lack of fundamental value, the value of DOGE is largely driven by demand from investors and traders making it unpredictable and subject to sudden shifts in sentiment. As such macroeconomic uncertainty surrounds DOOGE rendering it vulnerable to any external economic shocks or bad news surrounding cryptocurrencies as seen now with SVB’s collapse.
Contribution Of Federal Reserve To SVB Failure
The failure of Silicon Valley Bank can be partly attributed to Federal Reserve’s forceful hike in interest rates over previous year causing banks to amass long-term Treasuries investments which seemed low risk when interest rates were zero but whose worth dropped due to Fed’s intensification leading to unrealized losses for banks thus triggering current crisis situation SVB finds itself facing right now.