Institutional crypto trading fell apart after a series of high-profile U.S. bank failures in March, according to blockchain intelligence platform Chainalysis. According to the firm’s latest report on North American crypto activity, “institutional” transaction volume – defined as transactions worth over $10 million – nosedived starting in April 2023, while smaller “professional” and “retail” trading activity “remained constant.” The event piled onto a trend of slowing trading activity since the failure of numerous crypto exchanges and lending desks last year – particularly FTX and Alameda Research in November. Silvergate, Silicon Valley Bank, and Signature Bank were all forced to close down due to different reasons, leaving crypto businesses strained for options to access US dollar liquidity. As a result, stablecoins – of which 90% of global activity takes place USD-pegged tokens – started losing major presence in North America in February. Between then and June, the region’s share of crypto volume occupied by stablecoins fell from 70.3% to 48.8%. Many investors abandoned Circle USD (USDC) for Tether USD (USDT). This banking crisis shook the stablecoin landscape and caused many investors to move to safer options.
This news indicates that the banking crisis in the US has had a significant impact on the crypto trading industry. The failure of these banks has caused a lack of access to US Dollar liquidity, leading to a decrease in Institutional trading activity. This has led to a shift away from stablecoins in the North American region, causing many investors to move to safer options.
Overall, this is bad news for the crypto trading industry. It indicates that there is a lack of access to US Dollar liquidity, which can be a major hindrance to the growth of the industry. However, it is encouraging that there are still some investors who are willing to take the risk and move to safer options.
You can read more about this topic here: Decrypt: US Banking Crisis Destroyed Institutional Crypto Trading: Chainalysis