The banking sector faces issues following the fall of many prominent institutions, and some struggle to keep up the pace. Markets are sensitive, and investors lose patience amid uncertainties resulting in a massive outflow. Even with the fall of Californian Silicon Valley Bank (SVB), the outflow was relatively high, usually shooting up with markets under turbulence.
Blockchain analysis firm Chainalysis brought insights into the recent outflows from the centralized exchanges (CEXs). It stated that the outflows jumped higher, citing the potential fear of users of exchanges going down and losing access to their assets.
According to Chainalysis data, on March 11, after SVB’s collapse, the hourly CEXs to DEXs outflow hit a whopping 300 million USD.
The same was the trend when last year’s one of the biggest crypto havoc, crypto exchange FTX filed for bankruptcy. The instance spread fear across the crypto space, making investors and users anxious about other crypto companies.
However, other analytics platform data shows the trading volume surge for big decentralized exchanges was not for quite long.
Following the news of SVB, Circle’s USD Coin (USDC) stablecoin started losing its peg with US dollars. The stablecoin even reached its all-time low after dropping to 0.88 USD. This came in the wake of a stablecoin issuer firm’s statement citing that its 3.3 billion USD worth of USDC stablecoin reserves were with the startup-focused bank.
Chainalysis data shows that stablecoin was the top-moving cryptocurrency to decentralized exchanges. The movement was so significant that Coinbase-like centralized exchange firms had to stop trading USDC stablecoin over their platform temporarily. It noted that even Curve3pool and Uniswap-like exchanges had a surge in USDC inflow.
The blog post added that though many crypto assets have witnessed a surge in acquisition, USDC stablecoin was at the top.
The confidence in the stablecoin was the reason behind the uptick in its movement despite losing USD per episode. Although stablecoin drastically lost its peg for the first time, the investors were keen to accumulate the asset considering its price a discounted one, and hoping to make profits once it retook its peg. After a couple of days, the stablecoin started moving back to normalcy and soon attained its value of $1.
In recent past weeks, prominent US banks collapsed due to different reasons. From crypto-friendly banks Silvergate and Signature to startup-focused Silicon Valley Bank, the banking space is struggling to move forward. In addition, several other banks, from Credit Suisse to First Republic Bank, are also going through tough times.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.