The closure of Silvergate, SVB, and SBNY banks created a temporary turmoil for stablecoins and confirmed the significance of Satoshi Nakamoto’s decision to create Bitcoin. This is written with Glassnode.
The Crypto asset industry has found itself shorting three of the U.S.’s crypto-friendly banks following an extremely eventful week.
Investors seem to be seeking safety in the least trusted major assets #Bitcoin and #Ethereum
Read more in our latest analysis 👇 https://t.co/ULZot2InKD
— glassnode (@glassnode) March 13, 2023
Previously, news of the FDIC rescue of the depositors of the above-mentioned financial institutions in the stablecoin sector came out. During March 11-12, the exchange rates of USDC, DAI, FRAX, USDP, USDD, and GUSD all deviated significantly from parity with the US dollar.
Circle and Coinbase are part of the Center consortium, which is the issuer of USDC. On March 11, the company announced that it holds partial reserve collateral ($3.3 billion) of SVB assets.
Depeg was observed for the first time since the 2022 UST crash. USDC and DAI fell to $0.88 and $0.89, while BUSD and USDT formed parity premiums of 1% and 3%, respectively.
Analysts highlighted that USDC’s market share has remained in the 30-33% range since October 2022. Resuming the possibility of converting stablecoins into fiat currencies from March 13 will allow us to assess the stability of these values.
Experts also noted that BUSD’s share fell from 16.6% to the current 6.8% as regulators put pressure on Binance’s stablecoin partner Paxos. USDT rose to 57.8%.
“Ironically, Tether has been viewed as a safe-haven asset due to fears of contagion among stablecoins. The latter comes from the heavily regulated U.S. banking sector,” the analyst said.
Demand for Bitcoin and Ethereum skyrocketed amid news of SVB’s collapse. Along with the withdrawal of tokens from centralized platforms, the pattern of investor behavior during the FTX crash was repeated.
In recent days, the exchange balances of the No. 1 and No. 2 cryptos by market capitalization have reduced their available supply by 0.144% and 0.325%, respectively. The total monthly outflow was $5.9 billion.
Experts emphasized that in terms of value, investors withdrew $1.8 billion worth of Bitcoin and Ethereum, a relatively small value compared to similar events in the past, which was a sign of confidence among market participants.
The analyst also sees USDT and USDC flowing into exchanges at a rate of $1.5 billion to $2.3 billion per month, which is lower than the outflow rate of BUSD (~$6.8 billion), indicating a “shift to stablecoins.”
“The market appears to be reacting to the influx of ‘stablecoins’ and the withdrawal of Bitcoin and Ethereum exchanges. This reflects a high appreciation among investors for trustless crypto non-custodial storage,” concluded the expert.
Recall that on the night of March 13, the price of Bitcoin rose above $24,000.
Earlier, CoinShares analysts recorded record outflows from cryptocurrency funds.
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