- USDC has seen increased swaps as more Bitcoin leaves exchanges.
- BTC volume reaches almost a three-month high as transactions go up.
Fear, uncertainty, and doubt (FUD) about Bitcoin stemming from the collapse of a single bank contributed to its downward trend earlier this week.
Yet, the failure of yet another bank may have reversed the public’s opinion and brought back support for the king coin. However, Bitcoin may have been affected differently by the Silicon Valley bank run that triggered a drop in USDC.
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The Silicon Valley Bank run
The California Financial Institutions Control Board closed Silicon Valley Bank, a significant bank for startups with venture capital backing. It was the first bank insured by the FDIC to go bankrupt in 2023.
The California regulator has designated the FDIC as the receiver to safeguard insured savings, although the reason for the shutdown is unknown. SVB, one of the 20 largest banks in the U.S. by total assets, financed several startups focusing on cryptocurrencies.
People’s reactions to the SVB failure suggest uncertainty is the current prevalent mood. The process of withdrawing assets for customers with $250,000 or more has sparked discussions based on a thread by Mark Cuban (an American businessman) and the following comments.
In addition, Circle announced in a statement that over $3 billion of its $40 billion was held by SVB. Another negative reaction has been the flight of USDC holders exchanging their holdings for other stablecoins and Bitcoin.
Bitcoin sharks and whales step up accumulation
According to Santiment statistics, the accumulation of whales and sharks continued despite the FUD that was caused by the Silvergate crash.
As of this writing, addresses with 10-10,000 BTC had risen to over 67%. Looking at the data, it is clear that on 11 March, there was an upswing in whale and shark accumulation, coinciding with the time that USDC was experiencing a capital flight.
BTC volume goes up a notch
In addition, the volume metric on Santiment revealed some intriguing actions. By 9 a.m. UTC on March 11, BTC volume had already reached 45 billion, and by 17:00 UTC, it had reached 35 billion.
This volume is notable because it is the highest Bitcoin has seen since December. There is little doubt that this is a sign of a rise in business activity. There were more than 39 billion as of this writing.
Bitcoin Outflow becomes dominant
Even if the amount of trades has increased, most tokens have left exchanges. More and more Bitcoin (BTC) holders are moving their coins off exchanges because of the continuing swap with USDC.
CryptoQuant’s Netflow measure shows that on 10 March, more BTC left the system than entered; this trend persisted as of this writing.
A tale of two prices
Looking at the spot price of BTC/USDC at the time of writing, we can see that BTC has increased in value by more than 11% on a daily timeframe. At the time of writing, one Bitcoin was worth roughly $22,600 at the current USDC exchange rate.
Yet, on a daily timeframe, the BTC/USD spot price showed that it had lost almost 1% of its value, trading at around $19,900 and $20,000.
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A possible indicator of the degree of interdependence between conventional finance and cryptocurrency is the public’s reaction to the SVB failure, which was focused on Bitcoin and stablecoins.
Even so, Bitcoin showed that, despite its volatility, it could be a viable alternative store of wealth.