The collapse of Silicon Valley Bank (SVB) meant investors loaded their bags with USD coins (USDC), along with an exodus of funds from centralized exchanges (CEX) to decentralized exchanges (DEX).
Outflows from centralized exchanges often increase when markets are in turmoil, blockchain analytics firm Chainalysis explained in a blog post dated May 16. postas users are likely to fear losing access to their funds when stock markets fall.
Data from Chainalysis shows that hourly outflows from CEX to DEX peaked at more than $300 million on March 11, shortly after. SVB has been shut down by the California regulator.
A similar phenomenon was observed during the collapse of the FTX cryptocurrency exchange last year, amid fears that the contagion could spread to other crypto firms.
However, data from blockchain analytics platform Token Terminal suggests that the increase in daily trading volumes for major DEXs was short-lived in both cases.
USDC was identified as one of the main assets being moved to the DEX, which according to Chainalysis was not surprising given that USDC spun off after stablecoin issuer Circle announced that it had $3.3 billion in reserves stuck to SVBwhich prompted many CEX companies such as Coinbase to temporarily stop trading USDC.
Related: Circle will clear “substantially all” pending minting and redemptions for USDC
What was surprising, Chainalysis noted, was the surge in USDC acquisitions on major DEXs such as Curve3pool and Uniswap, saying, “Several assets have seen large increases in user acquisition, but not more than USDC.”
Chainalysis theorized that this was due to confidence in the stablecoin, with some cryptocurrency users loading up on USDC while it was relatively cheap and betting on it would regain his allegiance – which he did on March 13, according to on CoinMarketCap.