Aftermath of SVB Collapse: Crypto Users flock to DEXs

Photo of author

By A D

The Chainalysis data reveals that on March 11, just after SVB was shut down by a California regulator, hourly outflows from CEXs to DEXs soared to nearly $300 million.

The SVB debacle not only shattered the banking industry, raising questions on its decision making and asset handling abilities, but also highlighted the fragility of centralised financial systems. The aftermath of the bank’s failure resulted in a surge of interest in decentralised exchanges, as daily trading volume increased by 255.36%- valuing almost up to $60 billion. The huge influx of activity on DEXs clearly is evidenced by their dramatic numbers. In a week following the bank’s failure, Uniswap emerged on top with a staggering trading volume of $31.69 billion. Meanwhile, Curve recorded weekly gains of 1075%, while PancakeSwap aw its trading volume surge by 65% to $2.17 billion. The combined trading activity across DEXs has resulted in a total trading volume of $76.71 billion in March, reflecting a growing distrust of traditional financial systems and a shift towards alternative, more secure ways of exchange.

The Ups and Downs of USDC

The distress caused by SVB had a ripple effect on various financial instruments, including the USDC stablecoin. As Circle put out a statement confirming that a significant portion of the $40 million backing USDC was held with SVB, the stablecoin declined in value causing it to lose its peg to the US dollar and fall to $0.87. This was the first time USDC had fallen below a dollar since 2019.

Despite the initial drop in value, USDC quickly regained its footing due to a surge in demand on DEXs. As the stablecoin became relatively cheap, many crypto users loaded up on USDC, leading to a significant increase in its acquisitions on these platforms. Infact, it is one of the top assets being moved to DEXs. As of March 13, USDC had recovered its dollar peg, showcasing the resilience and versatility of the decentralised finance ecosystem.  

Following the recovery of USDC and the resurgence of demand on DEXs, the crypto market experienced a renewed sense of optimism. Bitcoin grew to $22,470, while Ethereum achieved a high of $1600, leading to a solid session for cryptocurrencies. The swift rebound of the market after an initial decline underscores the potential it holds for the future of finance. As the market continues to mature and navigate the after effects of the American banking collapse, it is essential to keep an eye on possible risks and challenges while also exploring the opportunities presented by the rise of decentralised financial systems.

A D Avatar

Leave a Comment