• Three banks collapsed over the weekend, causing market volatility and uncertainty among investors.
• Diamond Standard, a blockchain company that tokenizes diamonds, saw an increase in sales of its products due to the fear of contagion spreading to other banks and digital assets.
• Trading volume of the tokenized diamond jumped almost 300% during the weekend as investors scrambled to find a safe asset.
Collapse of Three Banks Causes Market Volatility
Over the weekend, three prominent U.S. banks collapsed, leading to market volatility and investor uncertainty as to where they could store their cash for safety. Gold prices rose about 5%, and another asset that caught attention was tokenized diamonds from Diamond Standard, a blockchain company that allows investors to buy previously hard-to-invest-in gemstones.
Tokenized Diamonds See Surge in Sales
When Silicon Valley Bank and Signature Bank were shut down by regulators and USDC broke its dollar peg amidst fears of contagion spreading to other banks and digital assets, sales of tokenized diamonds increased substantially on Diamond Standard’s marketplace. Investors searched for hard assets like cash, commodities or real estate in order to protect their investments from volatility by fleeing into these safe havens. As a result, trading volume for the digitized diamond surged almost 300%.
How Tokenization Works
Diamond Standard collects physical diamonds together in a „coin“ with standardized value which is then stored in a vault – each coin holds eight to nine diamonds. The diamond-embedded tokens are digitized through an Ethereum-based digital coin called bitcarbon which is tradable on different exchanges.
Investors Scrambling To Find Safe Assets
Most clients who bought tokenized diamonds wanted out of stablecoins due to the uncertainties in the market caused by the bank collapses over the weekend; they were seeking out safe havens such as gold or hard assets like tokenized diamonds instead.
The collapse of three major banks led investors looking for safety towards gold and also towards hard assets like tokenized diamonds offered by Diamond Standard’s platform; this resulted in an impressive surge in trading volumes of around 300%. This has shown how even traditionally difficult-to-invest-in markets can benefit from modern technologies such as blockchain when it comes time for investors looking for safety during times of volatility and uncertainty