Blockchain analytics agency Chainalysis has reported a major shift of funds from centralized exchanges (CEX) to decentralized exchanges (DEX) following the collapse of Silicon Valley Financial institution (SVB).
In a March 16 weblog submit, Chainalysis defined that in occasions of market volatility, capital outflows from CEXs usually spike, as customers might fear that they will be unable to entry their funds if the trade crashes.
Hourly CEX-to-DEX outflows spiked above $300 million on March 11, shortly after SVB was shut down by California regulators, in line with Chainalysis information. An analogous pattern was noticed through the collapse of crypto trade FTX final yr, and there are issues that the contagion may unfold to different crypto corporations.
Nevertheless, information from Token Terminal, a blockchain analytics platform, means that in each circumstances, the surge in each day transaction volumes on the massive DEXs was short-lived. This implies that whereas customers might quickly flock to DEXs following an trade crash, the shift is just not essentially long-term.
Notably, Chainalysis additionally reported a spike in purchases of the stablecoin USDC on DEXs, possible on account of USDC being pegged to the U.S. greenback and thus offering a protected haven for customers trying to park their funds throughout risky occasions. How lengthy will this pattern proceed? And whether or not it’ll have any lasting affect on the crypto market stays to be seen.
Whereas the collapse of SVB might have been the speedy catalyst for this shift in person habits, it additionally highlighted the potential dangers related to centralized entities within the crypto ecosystem. Because the trade continues to mature, we’re prone to see extra customers flip to decentralized exchanges to achieve larger management over their funds and decrease counterparty threat they face.
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