• On March 10th, California regulators officially shut down Silicon Valley Bank (SVB) after the company disclosed it was in financial distress.
• Federal regulators stepped in to backstop SVB deposits before a bank run could ensue.
• The SVB fiasco triggered a short-term period of fear and trepidation in crypto markets, including USD Coin (USDC) depegging from one dollar.
Silicon Valley Bank Shut Down by California Regulator
On March 10th, California’s Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB). FDIC was appointed as the receiver to protect insured deposits. This news triggered a fire sale in both crypto and financial markets as SVB was a top-20 U.S. bank by total assets.
Mid-Quarter Financial Update Leads to Closure
Earlier in the week leading up to closure, SVB released its mid-quarter financial update which disclosed that they had suffered a loss of $1.8 billion due to securities sales and required an additional $2.25 billion to shore up operations. As many crypto-focused venture capital firms held their deposits at SVB, this caused alarm among investors in traditional finance and crypto markets alike.
FDIC Steps In To Prevent Bank Run
The government quickly stepped in with Washington announcing that all depositors would be protected regardless of account size – even those worth more than $250,000 were covered – without costing taxpayers anything additional funds. President Joe Biden later confirmed this statement giving way for some relief for investors worldwide who feared a potential bank run on SVB’s accounts due to uncertainty about their future prospects for survival .
Crypto Markets Reacts To News Of Closure
The closure sparked intense fear and trepidation among crypto markets as Circle’s USD Coin (USDC) briefly depegged from one dollar, causing losses among investors expecting USDC to maintain its stability against the fiat currency it is pegged against despite market volatility elsewhere – such as with stocks or commodities – due instability associated with cryptocurrencies like Bitcoin (BTC). Despite this short period of panic among investors, BTC still managed to rise above other assets classes during the same time frame showing resilience within cryptocurrency markets even during times of crisis affecting traditional finance markets such as what happened when SVB failed..
In conclusion, while Silicon Valley Bank’s failure has caused shockwaves throughout traditional finance and cryptocurrencies alike; Bitcoin has still managed to remain resilient amongst other asset classes even during times of crisis such as when SVB collapsed..