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Stablecoins – SVB Bank Run

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bluerobo
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The decline of the combined market cap of the three largest stables started with Tether at the time when the implosion of Terra/Luna happened. While USDT was falling, the market cap of USDC received a last push higher. CZ’s Tweet about the sale of Binance’s FTT tokens coincides with the decline of BUSD. The run on Silvergate’s deposits sent it down even more. Incidentally the market cap of Tether started to rise again. The bankruptcy of Silicon Valley Bank finally pushed USDC down in a meaningful way.

Chronological order of events:

  • UST - 09.05.22 – Depegging of UST (now USTC)

  • Celsius - 13.06.22 – Celsius suspended customer withdrawals

  • Three Arrows - 16.06.22 – Hedgefund failed to meet margin calls

  • Voyager Digital - 01.07.22 – Voyager Digital suspended customer withdrawals

  • CZ Tweet - 06.11.22 – Binance CEO announced to sell all FTT tokens (native currency of FTX)

  • Silvergate - 05.01.23 – Silvergate’s depositors withdraw over $8 billion in funds

  • Genesis - 20.01.23 – Genesis files for Chapter 11 bankruptcy

  • Paxos - 13.02.23 – The SEC sends a Wells Notice to Paxos (the issuer of the Binance USD stablecoin on Ethereum)

  • SVB - 10.03.23 – bank run on Silicon Valley Bank

Although the change in market cap for the three stables since CZ’s Tweets was significant, stability measures remained in line with the 100 days before.

Volatility significantly increased only after the run on Silicon Valley Bank.

Periods observed:

  • 29.07 – 05.11.22 – 100 days of data before the CZ Tweet as reference set

  • 06.11.22 – 09.03.23 – 124 days between CZ Tweet and SVB bank run

  • 10.03. – 26.03.23 – 18 days since SVB bank run

The price standard deviation increased by a factor of 2,5 for USDT, 7,8 for USDC and 2,2 for BUSD after the 10th of March 2023.

Daily market data from coingecko

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