Institutional crypto trading fell apart after a series of high-profile U.S. bank failures in March, according to blockchain intelligence platform Chainalysis.

According to the firm’s latest report on North American crypto activity, “institutional” transaction volume – defined as transactions worth over $10 million – nosedived starting in April 2023, while smaller “professional” and “retail” trading activity “remained constant.”

“Crypto activity contracted more in the months immediately following the March banking crisis that saw Silicon Valley Bank and crypto-friendly banks Signature and Silvergate close down,” the report’s authors wrote.

The event piled onto a trend of slowing trading activity since the failure of numerous crypto exchanges and lending desks last year – particularly FTX and Alameda Research in November.

Months later, Silvergate was forced to wind down after its suspicious ties to the massive alleged fraud at both firms put it too close to the regulatory spotlight. Days later, Silicon Valley Bank (SVB) met its fate from a run on deposits after the firm realized a multi-billion dollar loss on its underwater bond portfolio. As panic spread to other banks, Signature Bank was also placed into receivership.

Though all three firms fell for different reasons, the effect of their downfall was the same: crypto businesses were left strained for options to access US dollar liquidity, and many were forced to find banking support offshore.

In fact, stablecoins – of which 90% of global activity takes place USD-pegged tokens – started losing major presence in North America in February. Between then and June, the region’s share of crypto volume occupied by stablecoins fell from 70.3% to 48.8%.

“Since spring of 2023, the majority of stablecoin inflows to the 50 biggest crypto services have shifted from U.S. licensed services to non-U.S. licensed services,” Chainalysis added.

The banking crisis shook the stablecoin landscape by causing Circle USD (USDC), the second-largest stablecoin, to briefly lose its peg to the dollar. The event made many investors abandon the token for Tether USD (USDT), which now boasts a market cap of over $82 billion.

Edited by Stacy Elliott.