• Silicon Valley Bank (SVB) experienced a dramatic decrease in their shares after announcing a stock offering of $1.75 billion and an additional purchase of $500 million common stock by private equity firm General Atlantic.
• Hedge funds such as Founders Fund and Pantera Capital are urging portfolio firms to remove their cash from SVB due to financial instability.
• SVB is the go-to bank for many venture-backed technology businesses in the United States, but difficulties have arisen for cryptocurrency firms looking for other banking choices.
Silicon Valley Bank’s Stock Plunges
The stocks of Silicon Valley Bank (SVB) took a nosedive after the announcement of a stock offering of $1.75 billion in addition to a separate purchase of $500 million common stock by private equity firm General Atlantic on March 10th, 2021. This caused investors to sell their shares and led to an immediate plunge of 60% in the parent business’s shares, SVB Financial Group. On top of this, pre-market trading on March 10th saw another 44% dip, leaving investors feeling anxious about the future prospects for SVB and its customers.
Hedge Funds Advise Removal Of Assets
In light of these developments, hedge funds such as Peter Thiel’s Founders Fund have recommended that portfolio firms remove their cash from Silicon Valley Bank due to financial instability. This advice has been echoed by Pantera Capital – both a hedge fund and venture investor – who is also encouraging companies they have sponsored to investigate opening multiple accounts with different banks as an alternative solution. Additionally, Bloomberg reports that five more venture capital investors specializing in cryptocurrency have given similar advice but requested that their names remain undisclosed due to commercial sensitivities surrounding the issue.
Cryptocurrency Firms Seek Other Banking Options
The news comes at a time when cryptocurrency firms are already searching for other banking options following Silvergate Bank’s failure earlier this week. Numerous users on Twitter reported issues with logging into their accounts with SVB which has raised further questions about its reliability as a go-to bank for venture-backed technology businesses in America – it currently services over 2,600 customers within this industry alone according to its website.
Panic Among Traders
With both stock and crypto markets affected by the decline in SVB’s share prices, traders are feeling increasingly pessimistic about how far these losses could reach if drastic action isn’t taken soon to reassure customers of its financial state moving forward.
It remains unclear how much longer Silicon Valley Bank will be able to sustain itself if it continues down this path without any intervention or relief measures being put into place soon..