The collapse of Silicon Valley Bank has been the talk of Wall Street, Washington D.C., 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Wood believes SVB's collapse can be traced back to falling demand deposit accounts -- accounts from which funds can be withdrawn at any time on demand -- and a yield curve inversion. She posits that these are the primary culprits in the bank run that ended the country's 16th largest bank.
DON'T MISS: SVB Collapse: Race Against Time to Avert Disaster
Consumers have been taking advantage of higher yields in money market accounts and other funds. And at SVB, "start-ups were responding to a drought in venture capital funding by draining deposits to fund their operations," according to Wood.
Wood also sees the response from the Federal Reserve as being critical to containing any potential contagion that could cripple the banking sector, like the mortgage backed securities that nearly brought the U.S. banking industry to its knees in 2008.
But this collapse isn't bad news for everybody. At least one group of investors is getting a bump from the turmoil in U.S. banking. And this bump is to be expected.
But the entire crypto sphere isn't set to benefit as the DeFi ecosystem could be threatened by SVB's collapse.
