Understand the entire SVB crisis and how it affects startups and the global cryptocurrency market
On March 10, the American bank Silicon Valley Bank (SVB) ceased operations after the American authorities had decreed its bankruptcy, considered the second largest in the US banking sector.
The bank went bankrupt in just 48 hours, making it the largest failure of a US bank since Washington Mutual in 2008.
The news caused concern among SVB’s clients, including Brazilian startups, who failed to redeem their investments in time. Worse: the fall of SVB has shaken the cryptocurrency universe, which was already coming from a real earthquake after the collapse of FTX.
The most immediate consequences
“One of the main immediate consequences was the tension in the cryptocurrency market due to the loss of parity with the dollar by the main stable coin due to the blockade of 8.25% of assets,” says João Lucas Tonello, analyst at Benndorf Research.
Actions were approved on March 12 that allow the FDIC to complete the resolution of the SVB, guaranteeing depositors the withdrawal of their invested monies.
“This way, depositors will have access to all their money. In this way a sort of Bailout was implemented to avoid a chain fear of other banks in the USA”, analyzes Tonello. “But we still have to wait cautiously for the risks of failure of other banks. In the event that it is an isolated act, there are no major concerns. But if this is the beginning of a new 2008 crisis, we have a lot to worry about”.
A fall that affects the entire financial system
According to Ricardo Veles, CIO of Futurum Capital, the bankruptcy of SVB affects the entire financial system.
“It calls into question the quality of the regulators’ policies, as happened in 2008, after the bankruptcy of Lehman Brothers,” Veles says. “To ensure that there is no chain break of several companies that have kept their deposits in Silicon Valley Bank, the Fed has guaranteed the possibility of withdrawal by the bank’s customers ― but debt holders and shareholders are not covered by this mechanism”.
“I think the trend is that SVB ends up being bought by another institution, which would avoid more market fear and reduce equity market volatility in the short term,” he concludes.
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Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
