Artemis Big Fundamentals in Crypto

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Artemis Weekly Wrap-up (3/10/2023)

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Artemis Weekly Wrap-up (3/10/2023)

your go-to source for weekly fundamental updates

Jimmy Zheng
Mar 11
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Artemis Weekly Wrap-up (3/10/2023)

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GM to everyone this Friday - it’s been a brutal week for the broader tech and VC industry and we hope everyone is making it through OK🫡. This week’s update will be short and sweet 🧁

here’s what happened this week in crypto 👇

🪦 RIP Silicon Valley Bank

🤔 Open questions about USDC and reserves at SVB?

🫣 Binance suspends auto-conversion of USDC to BUSD + Coinbase suspending trading for BUSD next week

Thanks for reading Artemis Big Fundamentals in Crypto! Subscribe for free to receive new posts and support my work.

The crypto markets saw yet another sharp drop-off at the end of the week with average and median WoW price declines of 16.5% and 15.6%, respectively. This week's price action stemmed from the collapse of major VC and start-up bank Silicon Valley Bank (NASDAQ: SIVB) on March 10, 2023 (the second-biggest bank collapse in US history🫠).

let’s jump right in 👇

🪦 RIP Silicon Valley Bank

Silicon Valley Bank (NASDAQ: SIVB) announced that it was shutting down and that regulators were taking control of the company on March 9, 2023. This statement happened after a ~$40bn+ bank-run on 3/9/2023, the same day the company announced it was taking “strategic actions” to “benefit from higher rates and better protect against market volatility.” The banks intention to reposition its balance sheet to take advantage of higher rates was interpreted as a sign of weakness from depositors (read: VC backed start-ups and tech companies) and many investors urged portfolio companies to move deposits off the beleaguered platform.

Twitter avatar for @gurgavin
GURGAVIN @gurgavin
🚨 BREAKING 🚨 SILICON VALLY BANK HAS BEEN SHUT DOWN BY THE REGULATORS $SIVB
4:41 PM ∙ Mar 10, 2023
1,806Likes335Retweets
Twitter avatar for @BillAckman
Bill Ackman @BillAckman
The failure of @SVB_Financial could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash. If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered.
3:08 AM ∙ Mar 10, 2023
4,483Likes856Retweets

There have been many threads posted about the incident, and Blockworks Research has compiled some great threads walking through the details.

Twitter avatar for @blockworksres
Blockworks Research @blockworksres
Are you confused about the Silicon Valley Bank situation? We compiled the best threads covering the timeline to get you caught up to speed 🧵👇
6:13 PM ∙ Mar 10, 2023
190Likes53Retweets

🤔 Open questions about USDC and reserves at SVB?

Circle, the company behind the USDC stablecoin stated that SVB is one of the bank partners used to manage 25% of its cash reserve.

Twitter avatar for @gurgavin
GURGAVIN @gurgavin
🚨 BREAKING 🚨 CIRCLE THE COMPANY BEHIND THE $USDC STABLE COIN SAYS SILICON VALLEY BANK IS A PARTNER USED TO MANAGE 25% OF THEIR CASH RESERVE
11:58 PM ∙ Mar 10, 2023
599Likes100Retweets

Circle made a non-comment with its latest post on Twitter, simply acknowledging that it has exposure to SVB but not providing any information on the scope of its relationship.

Twitter avatar for @circle
Circle @circle
Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.
circle.comTransparency & Stability - CircleCircle-issued stablecoins — USDC and Euro Coin — are designed for stability. Learn more about our stablecoin backing and reserve transparency.
11:50 PM ∙ Mar 10, 2023
3,212Likes968Retweets

Avi lays out a back-of-the-envelope analysis - assuming 20% of USDC’s reserves are held in SVB, and there is a ~92% haircut on SVB assets, then the backing of USDC would be cut by ~$182mm which Avi believes would be easily absorbed by Coinbase’s balance sheet.

Twitter avatar for @AviFelman
Avi @AviFelman
USDC has 11.4b split between 7 banks. Two were SVB and SI. BNY Mellon likely holds the majority of assets (it's safest, if they wanted yield they'd be in treasuries). If 20% is in SVB and haircut on SVB is 92% (aggressive) then backing of USDC is cut by 182m, which is easily… https://t.co/LDThgztBNY
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11:05 PM ∙ Mar 10, 2023
1,076Likes259Retweets

🫣 Binance suspends auto-conversion of USDC to BUSD + Coinbase suspending trading for BUSD next week

Binance put out a note on March 10, 2023 stating that it has suspended auto-conversion of USDC to BUSD due to “current market conditions” and flags it as a “normal risk-management procedural step.”

Twitter avatar for @binance
Binance @binance
Binance has temporarily suspended auto-conversion of USDC to BUSD due to current market conditions, specifically related to high inflows & the increasing burden to support the conversion. This is a normal risk-management procedural step to take while we monitor the situation.
1:12 AM ∙ Mar 11, 2023
1,823Likes488Retweets

Unclear at this point how much this action has to do with Coinbase’s aforementioned decision to suspend trading for BUSD on March 13, 2023. Coinbase previously announced this change on Feb 27, 2023.

Twitter avatar for @CoinbaseAssets
Coinbase Assets @CoinbaseAssets
We regularly monitor the assets on our exchange to ensure they meet our listing standards. Based on our most recent reviews, Coinbase will suspend trading for Binance USD (BUSD) on March 13, 2023, on or around 12pm ET.
4:00 PM ∙ Feb 27, 2023
3,193Likes836Retweets

that’s all folks.

Detailed L1 dashboard for people who love more numbers in smaller font:

Detailed L1 dashboard for people who love more numbers in smaller font:

Note: Revenue represents fees that go to the protocol’s treasury or are returned to tokenholders via a burn mechanism (source: Token Terminal). Weekly commits and weekly dev activity as of 3/3/23.

The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments.

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Artemis Weekly Wrap-up (3/10/2023)

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