Chainalysis has reported that a series of bank collapses in the United States triggered an outflow of funds from centralized exchanges to decentralized exchanges, as well as an uptick in the popularity of USDC.
According to Chainalysis analysts, during times of turmoil in traditional financial markets, users often withdraw their funds due to concerns about the safety of their savings and the potential collapse of centralized sites. Typically, such outflows are short-lived.
However, following the announcement of the California regulator’s decision to shut down Silicon Valley Bank (SVB), the volume of transfers from centralized exchanges to decentralized exchanges exceeded $300 million per hour.
After a few hours, the volume dropped to below $100 million per hour. A similar situation occurred last fall when the major cryptocurrency exchange FTX went under.
In the wake of SVB’s collapse, the stablecoin USDC experienced a sell-off, as many users transferred their USDC to decentralized exchanges to save their money.
Despite this, the demand for the stablecoin remained strong, which Chainalysis representatives attributed to the high level of trust in Circle and USDC.
Many traders saw an opportunity to make a profit by buying and selling stablecoins after their value rebounded. Their plan was successful, as USDC quickly regained its peg to the dollar within a few days.
After the restoration of the USDC peg to the US dollar, traders began to take profits, causing the stablecoin’s capitalization to fall by $1.74 billion.