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Just recently, three major US banks, Silvergate, Silicon Valley Bank (SVB), and Signature Bank collapsed forcing a chain reaction in the broader crypto industry.
According to a report from data analytical platform Chainalysis revealing how the crypto firms and depositors reacted after the fall of these banks, there was an increase in the outflow of digital assets including USD Coin (USDC) and wrapped Ether (wETH) from centralized exchanges (CEXs) down to decentralized exchanges (DEXs).
As revealed by the reports, the activities were fueled by investors’ fear to lose their assets should the exchanges go down. In the wake of the fall of Silicon Valley Bank, the data showed that hourly outflows from CEXs to DEXs increased by over $300 million on March 11.
Interestingly, after the turmoil forced the USDC to lose its dollar pegging, investors seized the moment to increase their USDC acquisition according to on-chain activities from DEX platforms Curve Finance and Uniswap. Undoubtedly, this move signals investors’ confidence in the stablecoin to regain its dollar pegging.
Investor Reaction to the Collapse of US Crypto Banks
After the collapse of the crypto-friendly banks, a number of crypto firms revealed their level of exposure to the failed banks while several others distanced themselves and severed ties with the banks. Recall that USDC issuer, Circle announced that it has exposures of $3.3 billion in cash deposits stuck in the embattled SVB. The funds are roughly 8% of the overall reserve supporting the USDC.
Despite Circle’s level of exposure, the stablecoin issuer maintained that it will not stop carrying out its operations normally as he awaits to know how the collapsed bank’s receivership will affect its depositors.
In the same vein, stablecoin issuer and crypto firm Paxos, American crypto exchange Coinbase, and Celsius Network revealed their exposure to the New York-based Signature Bank after the US government shut down the crypto-friendly bank, citing system risk.
Just recently, SVB Financial Group filed for Chapter 11 Bankruptcy protection in order to find buyers to purchase its assets. Although SVB securities, capital funds, and general partners are not involved in the bankruptcy proceedings, the bank’s financial group is positive and open to getting strategic options for its businesses.
The post Crypto Investors Switching Assets to DEX After Top Bank’s Collapse appeared first on Latest News and Insights on Blockchain, Cryptocurrency, and Investing.
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