The collapse of Silicon Valley Bank caused investors to load their bags with USD Coin (USDC), along with an exodus of funds from centralized exchanges (CEXs) to decentralized exchanges (DEXs).
Outflows from centralized exchanges often spike when markets are in turmoil, blockchain analytics firm Chainalysis said in a March 16 blog post, as users are likely to worry about losing access to their funds when exchanges go down.
The Chainalysis data shows that hourly outflows from CEXs to DEXs spiked to more than $300 million on March 11, shortly after SVB was shut down by a California regulator.
A similar phenomenon was observed during the collapse of cryptocurrency exchange FTX last year, amid fears the contagion could spread to other crypto companies.
However, data from blockchain analytics platform Token Terminal suggests that the surge in daily trading volumes for major DEXs was short-lived in both cases.
USDC was identified as one of the top assets moved to DEXs, which Chainalysis said was not surprising given that USDC depegged after stablecoin issuer Circle announced it had $3.3 billion in reserves on SVB, which is much caused CEXs like Coinbase to temporarily halt USDC trading.
Related: Circle Clears ‘Virtually All’ USDC Coin and Redemption Backlog
What was surprising, Chainalysis noted, was the increase in USDC acquisitions on major DEXs like Curve3pool and Uniswap. “Several assets saw major spikes in user acquisition, but no more than USDC,” the blockchain analytics firm wrote.
Chainalysis theorized that this was due to confidence in the stablecoin, with some crypto users loading USDC while it was relatively cheap and betting that it would regain its peg — which it did on March 13, according to CoinMarketCap.