The collapse of Silicon Valley Bank saw investors open their wallets with USD Coin (USDC), along with an exodus of funds from centralized exchanges (CEX) to decentralized exchanges (DEX).
Outflows from centralized exchanges often spike when the market is in turmoil, blockchain analysis firm Chainalysis said in a March 16 blog post, as users are likely to worry about losing access to funds when the exchange goes down.
Chainalysis data shows that hourly outflows from CEX to DEX increased by more than $300 million on March 11, after SVB was shut down by California regulators.
The same phenomenon was observed during the collapse of the cryptocurrency exchange FTX last year, due to fears that the contagion could spread to other crypto companies.
However, data from the blockchain analytics platform Token Terminal suggests that the increase in daily trading volume for large DEXs does not last long in this case.
USDC was identified as one of the top assets moved to DEXs, which Chainalysis said was not surprising since USDC depegged after stablecoin publisher Circle announced it had $3.3 billion in reserves in SVB, causing many CEXs like Coinbase to temporarily stop trading USDC.
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What is surprising, Chainalysis notes, is the increase in USDC acquisitions on large DEXs such as Curve3pool and Uniswap. “Several assets saw a big spike in user acquisition, but none more so than USDC,” the blockchain analysis firm wrote.
Chainalysis thinks that this is due to confidence in the stablecoin, with some crypto users opening in USDC when it is relatively cheap and betting that they will get the hook – which they did on March 13 according to CoinMarketCap.
