SVB down & USDC temporarily depegs ⬇️

GM Baos,

Silvergate Bank, Silicon Valley Bank, and Signature Bank all collapsed in less than one week — so insane, right? The long term effects are still unknown, and we'll have to wait for things to settle over the next few weeks. In the meantime, stay safe 💙

Today we're covering all the events that lead to our beloved stablecoins trading under $0.95 🥲

Silicon Valley Bank... ⬇️ 

Silicon Valley Bank (SVB), the 16th largest U.S. bank crashed March 10th, making it the 2nd largest bank failure in U.S. history 🤯

Unless you work in tech, you’ve probably never heard of Silicon Valley Bank. They were the largest lender to tech startups and venture capitalists, with 50% of U.S. VC- backed startups as its customers. 

What happened?

A few days before U.S. regulators shut down Silicon Valley Bank, they were attempting to raise funds through selling shares. When that didn't work, they started talks to sell themselves. This totally FREAKED OUT clients, who starting withdrawing their money and telling other tech founders to do the same. 

Silicon Valley Bank's shares ($SIVB) had already plummeted -50% by the time regulators shut down the bank.

Going into the weekend, all we knew was that up to $250,000 of client deposits would be available on Monday (FDIC insurance). Although this didn't help the situation at all, since a majority of Silicon Valley Bank's clients hold way more than $250,000 in deposits.

Jim Cramer does not miss 🤪

How was crypto affected? 

We have reached a point where it's unlikely the crypto market will ever decouple from the U.S stock market. Whatever happens with U.S. stocks will affect crypto, whether we want it to or not 😭

After Silicon Valley Bank went down, Circle (USDC) revealed that they held $3.3b or 25% of their reserves in Silicon Valley Bank. This caused USDC to depeg and trade as low as $0.85. Other stablecoins also lost their peg due to the USDC fallout. 

PROOF, Ripple, BlockFi, and more announced that they hold cash with Silicon Valley Bank. It's like we were all just waiting to see who was gonna be next... 

What will happen next?

On Sunday, it was announced that depositors of Silicon Valley Bank would be able to access all of their money starting Monday.

It's hard to tell what will happen next. But we know that U.S. President Biden has said he's committed to holding those responsible for Silicon Valley Bank's collapse "fully accountable" 🫣

Reminder: It's okay to take breaks from web3 sometimes 💖 

Made us Kek 😂

If you made it this far, I'm impressed.

Thank you for reading today's Dumpling 🙂

–Cassidy