The day after Silicon Valley Bank failed, NFT trading volume plummeted to its lowest level since November 2021, leaving artists and collectors feeling uncertain about the future of the market.

2023 has already been a roller coaster year for NFTs, with conflicting reports on significant drops in sales some weeks, some of the top single sales of all time, a huge boost in trading volume likely pushed forward by the controversial NFT marketplace, Blur, and some predicting that NFT sales will fall by 72 percent in 2023.

Since the beginning of March, trading volume has fallen by 51 percent and sales have declined by 16 percent, according to DappRadar, and the headlines in the banking sector have certainly been a factor in that decline. Art is considered to be a luxury item, so when markets are bad and FUD is high, it's one of the first purchases to be cut from people’s budgets. Furthermore, investing in art and collectibles is one of the riskier moves, even in a good market, for those trying to build their wealth.

Perhaps the least surprising event during all of this chaos has been the resurgence of Bitcoin as an alternative to traditional investments, and, according to entrepreneur, investor, and former CTO of Coinbase Balaji S. Srinivasan, an alternative to fiat altogether. But what has been a bit of a surprise is the fact that while some parts of the NFT market are suffering, others are proving to be quite stable.

In early March, crypto-friendly Silvergate Bank revealed that it was facing inquiries from bank regulators and the DOJ, leading many of its crypto clients to sever ties with the bank. Barely a week later, Silvergate announced that it would be liquidating its assets voluntarily, which led to 2023's first high-profile bank run. Then crypto startup-friendly Silicon Valley Bank failed after a bank run triggered instead by the announcement of huge losses that had previously been concealed. And then Signature followed suit, with, you guessed it, another bank run.

Stocks fell (and then rebounded after the government announced various rescue deals), and the crypto community, first stunned by the potential catastrophe of losing their ability to fulfill payroll and other expenses, saw the silver lining in Bitcoin as it appeared from the ashes.

The price of Bitcoin has risen by nearly 40 since the SVB bank collapse (as of writing), from $19,762 on March 10th to a high of $28,401 on March 20. But more importantly, Bitcoin has meaningfully – if not temporarily – decoupled from the S&P 500 for the first time since September 2021.

"It's too soon to say that bitcoin has proven the narrative that it's an alternative in a banking crisis," said Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva, according to the Reuters report. "The rally we are currently witnessing in bitcoin will be looked back at as the point in time where its main property as a decentralized non-sovereign asset was stress tested," he added.

Sixteen percent is a pretty significant dip in sales for a market that was worth nearly $25 billion in the previous year, especially at a time when the NFT market was just beginning to show signs of recovery. A recent edition of DappRadar released on March 14 reported that NFT traders went “numb” in response to the turbulence in the banking sector in the United States. After all, many startups had their money in SVB, and it was only a matter of time before we learned which marketplaces, PFP projects, and other NFT-based companies had exposure to it.

But throughout the event, one segment of the NFT market remained stable. High-profile PFPs like CryptoPunks and Bored Ape Yacht Club were hardly affected by market conditions, with the most significant dip happening on March 11th, directly after SVB’s collapse. Even then, the floor price went below $100,000 and quickly rebounded, a relatively minor note in an otherwise triumphant run through the fire.

Other well-known PFP projects like Azuki and Artblocks also emerged unscathed, though not every project was as lucky. Proof, the company behind Moonbirds, revealed in a tweet that it had “some funds” in SVB. A sell-off ensued, leading to an overall loss of 18 percent of value.

The data implies that other than companies with direct connections to the source of the bleeding (in this case, SVB), large-scale PFP projects have emerged as being more stable than even the stable coin market, given the failures of Luna and Terra stablecoins in 2022, and the temporary decoupling of USDC from the dollar due to Circle’s (the company behind USDC) exposure to SVB.

So are more in the NFT space ready to officially label certain PFP projects as “blue chip” investments? Maybe. Most "blue chip" companies reach that status only after years of positive performance build-up (and back up) that reputation, and most of these projects have only a few years of data to offer. Even so, the performance of CryptoPunks, BAYC, Azuki, and Artblocks during this round of March Madness will certainly be a sticking point in future conversations about what is and isn’t a blue chip project.

When bitcoin surged, many were left wondering: Why did Bitcoin surge today? While it's better to think of it as an up-tick, one of the most eye-grabbing headlines this month was Balaji’s prediction that Bitcoin would hit $1 million in 90 days. (In the short term, most investors don’t see Bitcoin going to the moon any time soon, but Raoul Paul, the CEO of Real Vision, does see it going to $50,000 by the end of 2023.) Though Balaji’s prediction comes off as a bit over-enthusiastic, the underlying logic proves meaningful. Balaji claimed in a recent episode of Bankless that fear surrounding the recent banking crisis coupled with the imminent risk of hyperinflation, will lead to a major movement out of fiat and into cryptocurrencies. Namely, Bitcoin.

According to Fortune, only 10 percent of Americans have high confidence in the nation’s banks and financial institutions. Having lived through multiple bank bailouts and a lack of meaningful regulation, it's clear to the average person that banking is an industry that is not a permanent fixture of stability. Most recently, conversations about how profits made by investors are private while losses are public, i.e., covered by the taxpayer, have dominated the news cycle. If this viewpoint holds, then we may see more people buying into crypto as a hedge against inflation, but also as an alternative to using banks in general.

Either way, if past price cycles are any indication of the future, we may not see a meaningful crypto bull run until late 2024. But as Bitcoin continues to find its way into more wallets across the globe, it will be interesting to see whether it maintains its status as “digital gold,” or — if Balaji’s prediction of Bitcoin replacing fiat entirely comes to fruition — Bitcoin becomes our medium of exchange. This would leave the most stable and successful PFPs to claim the title of gold. While only time can tell, if March 2023 has yielded new indications of the future, it's good to know that the crypto sector had more good news than bad during the second-biggest bank failure in U.S. history.

Editor's note: Immutable Holdings and its subsidiaries (including NFT.com) do not have any direct exposure to Silicon Valley Bank ("SVB"), nor does it bank with them. Additionally, Immutable Holdings had previously reduced all exposure to Silvergate Bank prior to its announced liquidation. NFT.com is carefully monitoring these ongoing developments and remains committed to navigating the ever-changing market environment.