SVB OPINION THREAD:
I'm interested in everyone's take on SVB and whether it will cause any serious contagion, and what that might be (USDC losing its peg, for example), or if this will be mopped up by fiat printing yet again. Any and all thoughts are welcome and will receive a ⚡ in half an hour.
Steady lads deploying more capital
👍 for a star trek gif.
I don't know enough about US Fed bailout history to have an accurate opinion. From afar it seems the Gov will let some corps decay and prop others up. Directly or indirectly... Maybe someone with more detailed history can fill in some blanks.
This will eventually lead to greater adoption of Bitcoin as the penny will drop with yet more people.
Wether it’s mopped up will be determined by how many of the boys club have exposure. Think Goldman and AIG insurance bail out in 2009
There will be more shows to drop so I guess the money printer intact will go brrr again regardless
From what I’m reading this hits a lot of startups and founders, most of the accounts were above the 250k insured limit. Apparently they sold a shitload of securities that are on other banks balance sheets and that might create all sorts of problems… re usdc: feels a bit like ust last year but not sure if it will go down. I personally wouldn’t mind but it would probably affect a lot of people in countries with high inflation who use this for saving and that would suck
I'd guess every CFO of companies that were involved with SVB is looking over details and having frantic conversations with the rest of C suite this weekend.
Fallout potentials include some companies needing to close up shop if they can't secure stop-gap funding to pay invoices, payroll, etc. Longer term this bleeds into reduction of exhibiting at conferences.
And this happening at this point in the quarter let's some paper over the impact so it won't show up until reported another quarter later. The domino effect can lead to traditional "Sell in May and go Away" trading
The modern CFO doesn’t know what to do because they are used to borrowing at 0%.
There’s a real consequence and they don’t know how to tell their Boards they will need to service a debt facility at 9% interest.
NO bailouts ! 100%
I’m very sympathetic to Tom Luongo’s theory that the Fed is killing the stable coins and taking down the SV ESG goons a notch or two at the same time.
Stable coins are just another offshore dollar market the FED would prefer didn’t exist. Powell even complained about them in his testimony this week.
Will long term lending be seen as higher risk going forward demanding higher rates?
The dudes I hang with from my church have by and large not been responsive to my attempts to orange 🍊💊 pill them. Without saying it out loud, my sense is that it has been "Oh, here comes Duncan again."
But the news about SVB has stirred them up and really has them rattled. I think that, if nothing else, it may open their minds a bit to actually take a harder look at Bitcoin.🙏😁
Contagion is going to be bad - banks are gonna have to raise money NOW when it’s much scarcer than it was in the last 30 years. They will be paying double digit interest to debt facilities indefinitely.
If they don't get a bailout that's 8% of USDC's reserves going tits up, circle can try and limit redemptions to avoid the biggest sellers clearing out what liquidity they have but then they run the risk of people dumping USDC for other stablecoins or bitcoin to try and get out.
If they can't raise to cover that shortfall of 3 billion then it gloves off and all the algo stablecoins and coins with markets to USDC are going to take a clobbering as people try to unwind any exposure.
Cheap sats for us though, so there's that Silver lining! If this keeps up im liking bitcoin at 12k
I would say, this issue would be isolated to a small subset of banks if Dodd-Frank was not partially changed in 2018. Nevertheless, in 2018 the Economic Growth, Regulatory Relief, and Consumer Protection Act "rais[ed] the threshold to $250 billion from $50 billion under which banks are deemed too big to fail and also eliminated the Volcker Rule for small banks with less than $10 billion in assets."
Therefore, while a smaller confined subset of financial institutions would have been the only concern, we are now looking at a larger regional group that could potentially cascade out of control along with the necessary rise of interest rates. However, the US economy is strong, unlike the 2007-2008 Great Recession that was looming since 2005 which will confine any domino effect to the specific regional banks, associated regional communities and industries, and troubled tech sectors. Additionally, the digital currency markets will take a large hit (This is the crash I've been waiting for because the market has not come close to being bottomed from the recent crash and the Fed has over and again demonstrated a unique historical pattern to flush out instabilities and pop balloons in the markets. The Bitcoin ballooned value will also likely be highly impacted. Silverlake Cryto Bank also crashed this week. And mostly all account holders with SVB were uninsured deposits and commercial accounts.).
Signature Bank of New York just collapsed and more likely to come.
Your post is getting a lot of comments.
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