Pundits have taken to Twitter to share their two cents.
The Silicon Valley Bank collapse has been the talk of Wall Street, Washington DC and Main Street all weekend. So of course it was only a matter of time until Ark Invest’s Cathie Wood weighed in on the issue.
Wood believes that the collapse of SVB is due to the fall in demand deposit accounts (accounts from which funds can be withdrawn at any time on demand) and an inversion of the yield curve. She postulates that these are the main culprits in the bank run that ended with the 16th largest bank in the country.
DON’T MISS: SVB collapse: race against time to avoid disaster
Consumers have been taking advantage of higher returns on money market accounts and other funds. And at SVB, “startups were responding to a drought in venture capital funding by draining deposits to finance their operations,” according to Wood.
Wood also sees the Fed’s response as critical to containing any potential contagion that could cripple the banking sector, such as the mortgage-backed securities that nearly brought the US banking industry to its knees in 2008.
But this collapse is not bad news for everyone. At least one group of investors is getting a boost from the turmoil in US banking. And this bump is to be expected.
But the entire crypto sphere will not benefit, as the DeFi ecosystem could be threatened by the collapse of SVB.
