Crypto has been zoomin'! The industry showed remarkable resilience and recovery over the weekend, with the total market capitalization of all cryptocurrencies back above $1 trillion. Learn more on what happened in the crypto markets through the lens of EasyCrypto CEO, Earle Loxton.
Earle Loxton, CEO of EasyCrypto
Updates as of 15 March 2023
The crypto industry faced a major setback last week when three of the most crypto-friendly banks in the US collapsed within days of each other. Silicon Valley Bank (SVB), Signature Bank and Silvergate Bank were all shut down by regulators partly due to their exposure to stablecoins, which are digital tokens that are supposed to maintain a 1:1 peg with fiat currencies.
SVB was the first to fall on Friday, after it was revealed that it had been holding billions of dollars worth of USDC, the second-largest stablecoin after Tether, which is issued by Circle and Coinbase. SVB was also one of the most popular banks for tech startups and crypto firms, with nearly half of all U.S. venture-backed startups keeping cash with it. Signature Bank followed suit on Sunday, after state authorities closed it down.
Signature Bank was also a major player in the crypto space, holding $16.5 billion in crypto deposits as of March 8. It was also one of the main issuers of stablecoin USD Coin (USDC), along with Circle Internet Financial Corp., which had reserves worth $3.3 billion with the bank. Silvergate Bank was the last to go on Monday, after it failed to meet its capital requirements.
Silvergate Bank was known for its Silvergate Exchange Network (SEN), which enabled instant transfers between crypto exchanges and institutional investors. It had more than 1,100 crypto clients and $10 billion in deposits as of December 2020.
The failure of these three banks sent shockwaves across the crypto markets, as many investors feared that their funds would be frozen or lost. USDC also faced pressure, as it lost its peg and traded below $0.90 on some platforms. Bitcoin dropped below $20,000 and Ethereum below $1,400 on Friday, while other cryptocurrencies also suffered heavy losses.
However, despite this turmoil, the crypto industry showed remarkable resilience and recovery over the weekend. Many crypto firms and platforms quickly found alternative banking partners or solutions to continue their operations. Circle and Coinbase reassured users that USDC was fully backed by reserves and redeemable at any time. Other stablecoin issuers also confirmed that their tokens were fully backed and operational.
Moreover, many crypto enthusiasts saw this crisis as an opportunity to promote decentralized finance (DeFi), which aims to provide financial services without intermediaries or centralized control. DeFi platforms such as MakerDAO, Compound and Aave offered users ways to borrow, lend or swap cryptocurrencies without relying on banks or stablecoins.
By Sunday evening most cryptocurrencies had recovered most of their losses from Friday's crash. Bitcoin was trading above $24000, Ethereum above $1600 at press time . The total market capitalization of all cryptocurrencies was back above $1 trillion (+15%). The collapse of SVB , Signature Bank , and Silvergate showed once again how volatile the crypto space can be . It also highlighted the need for more transparency in stablecoins and other crypto-related activities.
However, it also demonstrated how fast and adaptable the crypto ecosystem can be in times of crisis . The quick recovery of crypto prices after the weekend is a positive signal for crypto investors who believe that digital currencies are here to stay and transform finance for good.
For a more immersive Crypto journey and access to more than 20 individual coins, be sure to activate EasyCrypto in your EasyEquities app today.
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