Crypto users turned to DEXs, loaded up on USDC after Silicon Valley Bank crash

The Silicon Valley Bank collapse saw investors load their suitcases 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. mailas users are likely worried about losing access to their funds when exchanges go down.

Funds sent from CEX to DEX after SVB collapse. Source: Chainalysis.

Data from Chainalysis shows that hourly outflows from CEX to DEX surged to over $300 million on March 11, shortly after SVB was closed by a California regulator.

A similar phenomenon was seen during the crash of cryptocurrency exchange FTX last year, amid fears that the contagion could spread to other crypto companies.

However, data from blockchain analytics platform Token Terminal suggests that the increase in daily trading volumes for large DEXs was short-lived in both cases.

Daily trading volumes for large DEXs from September to March. Fountain: token terminal

USDC was identified as one of the top assets moving to DEX, which Chainalysis said was not surprising given that USDC de-pegged after stablecoin issuer Circle announced it had $3.3 billion in reserves stuck in SVBwhich led many CEX like Coinbase to temporarily stop USDC trading.

Related: Circle clears 'virtually all' USDC minting and redemption backlog

What was surprising, Chainalysis noted, was the increase in USDC acquisitions in large DEXs such as Curve3pool and Uniswap. “Several assets saw big spikes in user acquisition, but none more so than USDC,” the blockchain analytics firm wrote.

Token purchases on Uniswap from March 7 to 14. Source: Chainalysis

Chainalysis theorized that this was due to confidence in the stablecoin, with some crypto users charging USDC while it was relatively cheap and betting that he would recover his point - what he did on March 13 according to CoinMarketCap.

Brief USDC takeoff March 11-13. Source: CoinMarketCap