Silicon Valley Bank Collapse

What a tumultuous week! 

Whilst last week there was clearly strain at Silvergate bank, this week, it announced a voluntary liquidation, putting at risk a large portion of banking relationships for many crypto exchanges.

Not to be outdone, Silicon Valley Bank (SVB) on Friday collapsed in the biggest US bank failure since 2008. SVB typically lent to and took deposits from venture capital businesses and the collapse has left many tech startups scrambling to be able to make payroll. 

Aside from the turmoil this has created in the equity market, the crypto markets were also rocked after Circle confirmed that $3.3bn of the $40bn reserves backing their USDC stablecoin were held at SVB. USDC, the second largest stablecoin behind Tether (USDT), lost its peg over the weekend, at one point trading at just 88c before recovering to around the 96c level after Circle tried to reassure the market by confirming they would honour the peg.

These actions have left the crypto market reeling, with BTC and ETH both down around 7-8% over the past 7 days. BTC tested the USD20k level on Friday, which proved to be a resistance level pushing the price back up to around USD20,500. 

With speculation that SVB would either be bailed out (which has for now been ruled out by Yellen) or rescued (perhaps by Elon Musk), the week ahead has been set to be a likely volatile one.