Unless you’ve been living with your head under the sand for these past couple of weeks, you would’ve most definitely heard about the industry-shaking demise of Silicon Valley Bank (SVB).
As with everything finance related, the fall of the Californian bank sent shockwaves throughout many surrounding spaces, with a couple of which being the ever-sensitive crypto and NFT industries.
With this in mind, Web3’s most notorious dApps platform DappRadar has taken a statistical deep dive into how the traditional banking failure has impacted the decentralised space.
Here we will take a look at the bank’s impact on the seemingly not-so-stable USDC stablecoin, as well as its effect on the world of NFTs.
DappRadar on USDC
Before its demise last weekend, SVB had made a name for itself for being the one of the best banks for tech and start-up entities (both Web2 and Web3 native) to work alongside.
However, with billions worth of dollars now in jeopardy, the bank’s fall was obviously felt by many (if not all) of its depositors- none more so that the digital asset firm behind the USDC stablecoin, Circle.
Here came the first big impact from SVB’s insolvency, as through its close ties with the world’s second largest stablecoin (with 3.3% of its $40 billion reserves being linked to SVB), USDC was compromised and lost its peg against the US dollar. On March 11th USDC hit a low of around$0.88, with feelings of FUD also prompting the coin to record net outflows worth billions of dollars on multiple days.
Although now almost back to parity, USDC’s momentary market dip has caused unavoidable feelings of uncertainty surrounding stablecoins that will most probably outlast SVB’s time in the crypto spotlight. In addition, its supply and market capitalisation have also dropped around 9.1%.
DappRadar on NFTs
The collapse of SVB also intuitively left a mark on the NFT scene, as the days following the catastrophic event saw the number of NFT traders plummet to the lowest point since November 2021.
More specifically, Saturday 11th March- i.e. the day after the Federal Deposit Insurance Corp. took control over the bank- only 12,000 active NFT trader were recorded by DappRadar. And whilst the figure for singular NFT trades didn’t amount to such a landmark low, its 33,112 figure was still the lowest daily tally to be recorded this year.
Per data from DappRadar, SVB’s demise has put a hefty dampener on the month in general (thus far), as NFT trading volume has fallen 51%, whilst actual sales have sunk 15.88%.
When it comes to the value of Blue-Chip NFT holdings, may of such appeared to be unaffected by the fall of SVB. For example, Yuga Labs’ illustrious Bored Ape Yacht Club (BAYC) and CryptoPunks (in which it acquired the IP for back in March 2022) saw a brief dip in floor prices before quickly recovering.
In turn, such robustness caused community members to joke– albeit rather truthfully- about the fact that their CryptoPunk NFTs were ‘more stable’ than the actual USDC stablecoin.
In speaking on how Yuga Labs- which, in truth, had limited exposure to SVB- has built a sturdy, market-insensitive NFT empire, DappRadar research analyst Sara Gherghelas had this to say:
“They have a very clear road map, the team is visible, and they decided to deliver a good project after the Ape ecosystem. They keep building. They are showing that if you’re part of their community, they have so many perks and benefits”.
In addition, the BAYC ecosystem wasn’t the only NFT empire to stand its ground against harsh market conditions, as the likes of Azuki and Art Blocks were also relatively unaffected by the chaos going on.
However not all Blue-Chip collections went unscathed, as in wake of the bank’s downfall, Moonbirds developers PROOF took to Twitter to transparently inform its community about the funds it had invested in SVB.
Per stats from OpenSea, the collection’s floor price had been floating from 8-6 ETH over the past few months, however in wake of the announcement, such figure has since dipped (and remained) to a price of around 3-4 ETH.
Perhaps contributing to such value change was one holder’s sale of 500 Moonbirds on Saturday 11th of March- a sale which collectively saw them incur losses of between 9% and 33% (i.e. over 700 ETH/ $1.1 million). Further, if there was ever an example of what major FUD looks like, this was most certainly it.
For added context, such fall comes despite PROOF stating that it has ‘diversified’ its assets across ETH, stable coins, and fiat, and that it’s still ‘OK’ on the financial and operational side of things.
That being said, the uncertainty in this case is still rather understandable, as not only do the markets never lie, but PROOF had also recently cancelled its ‘Proof of Conference’ event that was penned in for May.