What's the Impact from SVB&SI Bank?
The 3 banks in trouble, its direct and indirect impact:
• Silvergate and Signature were the two main banks for crypto companies, while Silicon Valley Bank had a lot of crypto startups and VCs as customers.
• The failure of the crypto banking trifecta rippled into the stablecoin market over the weekend.
• By Sunday night, when the feds stepped in to backstop deposits at Signature and SVB, cryptocurrencies were rallying and the stablecoins had regained their pegs.
The Silicon Valley Bank collapse just clipped the Fed's ability to raise rates. This is not a credit event but a collapse in bond prices.
The bank borrowed from depositors and bought the safest assets (on paper) such as government and mortgage bonds. The spike in rates and bond losses cratered its balance sheet triggering panic among depositors.
The contagion is enormous in the US, which the Fed cannot ignore.
The direct impact is business failures from loss of deposits and the inability to refinance loans.
The indirect impacts are bank runs across other regional banks, tighter credit standards and the selling of other assets in the hunt for liquidity.
Keep on keeping watch on how the expected and the unexpected to unfold along the timeline.
$SVB Financial Group(SIVB)$ $Signature Bank(SBNY)$ $Silvergate Capital(SI)$
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