The last week has shaped up to be one of the fastest paced, and certainly most consequential for the digital asset space in 2023. In just a few short days, three primary banking institutions in the US, all of which serviced firms within the industry, entered voluntary liquidation, or were taken into receivership by US regulators.

• Silvergate (SI) announced intent to voluntarily wind down on 8-Mar, in what is expected to be an orderly manner, and returning capital in full to depositors.

• Silicon Valley Bank (SIVB), the 16th largest US bank, was closed and put into receivership by FDIC on 12-March, making the $209B bank failure the second largest in US history.

• Signature Bank New York (SBNY) has also been closed as of 12-Mar, per a Federal Reserve announcement on the matter.

For all three institutions, it is expected that full deposits will be returned, whether by reserves held, or via FDIC and US regulators deposit guarantees. With many large digital asset firms, and stablecoin issuers using one, or multiple of these banking partners, the weekend turned out to be a volatile one. Of particular interest is Circle, issuer of USDC, who notified of some $3.3B in cash held at SVB, creating conditions for a temporary breaking of the $1 peg.

In this edition, we will focus on some of the key effects playing out on-chain, and within wider in market structure, including:

• De-pegging of several stablecoins from $1, as well as dominance shifting back towards Tether (USDT).

• Net capital outflows from the digital asset market, observable across both stablecoins, and the two majors, BTC and ETH.

• Cyclical lows hit in futures open interest, despite elevated trade volumes, and speculative interest leading to an explosive rally back to $22k for BTC, and $1.6k for ETH.