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Impact of Silicon Valley Bank’s Collapse on Stablecoin Supply

4.3 | by Lim Yu Qian

Silicon Valley Bank crisis impact on crypto stablecoin supply 2023

Stablecoins were caught in the fallout from the bank run on the Silicon Valley Bank (SVB) and its subsequent intervention from regulators. Total stablecoin supply shrank with supply shrinking by 1.9 billion at its peak, with holders abandoning what is usually considered a safe haven crypto asset. Even after markets cooled with the backstop on SVB, total stablecoin supply still fell by a net 0.9 billion, from March 7 to March 13.

Circle’s USDC saw a massive outflow of 3.9B in supply, amid Silicon Valley Bank collapse

On March 10, the go-to bank for start-ups, SVB, shut down due to uncertainty surrounding its solvency. Companies which had not withdrawn their deposits in time, were faced with the possibility of leaving their funds stuck in SVB. This included Circle, the stablecoin issuer of USD Coin (USDC), which issued a statement on March 11 that $3.3 billion of its $40 billion reserves remained with SVB.

The tweet caused panic across the crypto community, and USDC’s price fell to a low of $0.8789 on the morning of March 11. As USDC depegged, the market selloff saw its supply record a net outflow of 1.90 billion by the end of the day, or a decrease of 4.4% overnight from 42.74 billion on March 10 to 40.84 billion on March 11. 

US regulators stepped in on March 12 to backstop both depositors and financial institutions affected by the SVB collapse. Although the news saw USDC regaining its peg, the stablecoin still saw a 9.1% drop in supply and market capitalization. The net outflow in USDC supply reached 3.93 billion, decreasing from 43.43 billion at the start of March 10, to 39.50 billion at the end of March 13.

USDC depegging over the weekend resulted in growth for both TUSD and DAI

Through the turmoil, stablecoins TrueUSD (TUSD) and Dai (DAI) saw significant supply growth over the same period, with net inflows of 57.4% and 27.4% respectively. Other stablecoins Tether (USDT) and Frax (FRAX) saw 1.3% and 0.1% supply growth respectively as well.

In absolute terms, DAI recorded the biggest gain with 1.35 billion increase in supply. USDT, TUSD and FRAX trailed behind with 0.94 billion, 0.73 billion and 0.69 billion in supply growth respectively.

Supply remained relatively unchanged for Binance USD (BUSD), which had been hit by US regulator sanctions on issuer Paxos in February 2023.  BUSD supply decreased slightly by 4.66 million (-0.1%).

Silicon Valley Bank faced withdrawals amounting to $42B within 48 hours of its fundraise, leading up to its shutdown

With startups seeing record-level of funds raised in the past few years, SVB customer deposits ballooned on their balance sheet. SVB invested in long-dated treasury bills in order to generate higher interest income from these supposedly safe investments.

Amid rising interest rates, SVB faced increasing withdrawals,requiring the company to sell off their $21 billion bond portfolio at a loss of $1.8 billion. The bank intended to raise $2.25 billion through equity to cover the losses, but this move backfired and raised speculation among startups and venture capitalists.

The failed fundraise saw massive withdrawals in the tune of $42 billion over 48 hours, and prompted the Federal Deposit Insurance Corporation (FDIC) to intervene and place SVB under receivership late on Friday, March 10.


The study looked at six largest stablecoins (USDT, USDC, BUSD, DAI, FRAX, TUSD) by market capitalization, and examined their supply changes. The data was taken from CoinGecko, for the period of March 10 to March 13, 2023. 

This study was co-written by Haziq Darwisy. Follow them on Twitter here.

If you use these insights, we would appreciate a link credit to this article on CoinGecko. A link credit allows us to keep supplying you with future data-led content that you may find useful.

Check out our latest Stablecoins Statistics 2023 Report for more detailed analysis of the asset.

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Lim Yu Qian

Lim Yu Qian

Yuqian is on the Growth team at CoinGecko and also goes by Q. She is especially fascinated by the philosophical and socioeconomic aspects of crypto. Follow the author on Twitter @solosbrqt

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