I decided to follow the Silicon Valley bank collapse and USDC's exposure to the failure, here are some of the things I have been able to gather:
“A potential 600 Billion dollar hole in the US economy and there is no possible solution in sight”
(well except for pumping more money into the system or reducing interest rate which has been instrumental in curbing the inflation rate)
Silicon Valley Bank collapse is one of the biggest bank failures since 2008, and one of the significant stablecoins is caught in the middle of the storm, but they are not the only one. From what I have gathered a lot of venture capitalists and tech startups have deposits in SVB. 95% of those deposits are above the insured $250,000 threshold, which is over $160 billion dollars.
The tech space has suffered some significant hits in the first quarter of 2023, and it is feared that this will stall development and that includes the crypto industry. A lot of young people i know have ventured into the tech space considering the tech industry boom of 2021-2022. However, considering the current state of the industry, it is looking like a bad idea.
There is a current shortage of capital. Now a lot of venture capitalists are screwed due to the SVB collapse which increases the capital problem. Also, most startups (with deposits in SVB) are screwed as well and the major tech companies are downsizing. From an onlooker standpoint, this isn’t an industry I will touch anytime soon if I value my money.
Another major talking points these few days has been the uncertainty surrounding the financial system (both the traditional and non-traditional financial systems). Crypto was created to solve this problem, but it is fair to say we’ve created the same problem in our industry.
There is no safe space. All the imaginary money (stocks, crypto, etc) is under attack. Maybe it is time for people to go back to doing things the traditional way by creating products or services that have real value, rather than speculating on intangibles.
