Termination of activities of Silvergate banks, SVB And SBNY caused temporary turbulence in stablecoins and confirmed the significance of Satoshi Nakamoto’s decision to create bitcoin. This is written in Glassnode.
After an extremely consequential week, the digital asset industry finds itself short three crypto friendly banks in the US.
Investors appear to be seeking safety in the most trustless major assets #Bitcoin and #Ethereum
Read more in our latest analysishttps://t.co/ULZot2InKD
— glassnode (@glassnode) March 13, 2023
Before the news of salvation FDIC depositors of the aforementioned financial institutions in the stablecoin segment in the period of March 11-12, there was a significant deviation in the rates of USDC, DAI, FRAX, USDP, USDD and GUSD from parity with the US dollar.
Circle, along with Coinbase, is part of the Center consortium, which is the issuer of USDC. On March 11, the company announced that it was holding part of the asset’s reserve collateral ($3.3 billion) in SVB.
Depeg observed for the first time since the UST collapse in 2022. USDC and DAI fell to $0.88 and $0.89, while BUSD and USDT formed a parity premium of 1% and 3%, respectively.
Analysts highlighted that since October 2022, USDC has maintained a market share in the range of 30-33%. The resumption of the possibility of converting a stablecoin into fiat from March 13 will allow us to assess the stability of these values.
The specialists also noted the reduction in the share of BUSD from 16.6% to the current 6.8% amid pressure from regulators on Binance’s stablecoin partner, Paxos. USDT rose to 57.8%.
“The irony is that Tether has come to be seen as a safe-haven asset amid fears of spreading contagion among stablecoins. The latter comes from the heavily regulated US banking sector.” analysts noted.
Amid news of the collapse of SVB, demand for Bitcoin and Ethereum has skyrocketed. This was accompanied by the withdrawal of coins from centralized platforms, which repeated the pattern of investor behavior during the collapse of FTX.
In recent days, the exchange balances of the first and second largest cryptocurrencies by capitalization have decreased by 0.144% and 0.325%, respectively, of their available supply. The total outflow rate amounted to $5.9 billion on a monthly basis.
In value terms, investors withdrew $1.8 billion worth of bitcoins and Ethereum. Compared to similar episodes in the past, the value turned out to be relatively small, which is a kind of sign of market participants’ confidence, the experts emphasized.
Analysts also saw USDT and USDC inflows into exchanges at a monthly rate of $1.5bn to $2.3bn. This is less than the BUSD outflow rate (~$6.8bn), indicating a “switch to stablecoins”.
“The market seems to have reacted to the influx of ‘stablecoins’ and withdrawals from Bitcoin and Ethereum exchanges. This reflects the high appreciation investors have for non-custodial storage of trustless cryptocurrencies.” experts concluded.
Recall that on the evening of March 13, the price of bitcoin rose above the level of $24,000.
Earlier, CoinShares analysts recorded a record outflow of funds from crypto funds.
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