A whole bunch of venture capitalists and crypto bros are at risk of getting smoked… But so too are a whole lot of startups run by normal people whose payrolls and investment capital moves through SVB. I wouldn’t be surprised to see a federal stabilization and bailout in this particular case.
My understanding is SVB took in a large volume of deposits during the pandemic, and leverage invested it into treasuries that at the time had decent yields, but that are now worth far less with interest rates up. The need to sell T bills at great discount to cover withdrawals basically torpedoed their liquidity and forced them to realize losses on those now less valuable bonds. And so, the crash.
It’s (was?) a very large bank, and disproportionately important in the financing of the tech sector. And I wouldn’t be surprised if a lot of companies with military / intelligence significance face potential ruin here. That might be an impetus for intervention.
Gonna be interesting to see how this plays out. So far I haven’t read much suggesting there’s a very great fear of contagion, but I won’t pretend I have any expertise in how this may develop or spread.