Institutional cryptocurrency trading collapsed in March after a series of high-profile banking failures in the United States, according to blockchain intelligence platform Chainalysis.
According to the company’s latest report on cryptocurrency activity in North America, the number of “institutional” transactions – defined as transactions worth more than $10 million – has fallen since April 2023, while activity in trade “professional” and to a lesser extent “retail” “remained steady. .”
“Crypto activity contracted in the months immediately following the March banking crisis that led to the closure of Silicon Valley Bank and cryptocurrency-friendly banks Signature and Silvergate,” the report’s authors wrote.
The event adds to a trend of declining trading activity since the failure of several cryptocurrency exchanges and lending desks last year, notably FTX and Alameda Research in November.
Months later, Silvergate was forced to close due to its dubious ties to an alleged massive scam by two companies, putting it very close to the regulatory spotlight. Days later, Silicon Valley Bank (SVB) suffered a run on deposits after the company suffered a billion-dollar loss on its troubled bond portfolio. As the panic spread to other banks, Signature Bank was also placed in receivership.
Although all three companies fell for different reasons, the impact of their decline was the same: cryptocurrency companies were affected in terms of options to access liquidity in the US dollar, and many were forced to seeking overseas bank support.
In fact, stablecoins – where 90% of global activity is done with tokens linked to the US dollar – began to lose a significant presence in North America in February. Between then and June, the share of stablecoins in the region’s cryptocurrency volume fell from 70.3% to 48.8%.
“Since spring 2023, the majority of stablecoins flowing into the top 50 cryptocurrency services have shifted from US-licensed services to non-US-licensed services,” Chainalysis added. .
The banking crisis rocked the stablecoin scene by causing Circle USD (USDC), the second largest stablecoin, to briefly lose its peg to the dollar. The event caused many investors to abandon the token in favor of Tether USD (USDT), which currently has a market capitalization of more than $82 billion.