Two of the banks that were friendliest to the crypto sector and the biggest bank for tech startups all failed in less than a week. While cryptocurrency prices rallied Sunday night after the federal government stepped in to provide a backstop for depositors in two of the banks, the events sparked instability in the stablecoin market.

Silvergate Capital, a central lender to the crypto industry, said on Wednesday that it would be winding down operations and liquidating its bank. Silicon Valley Bank, a major lender to startups, collapsed on Friday after depositors withdrew more than $42 billion following the bank’s Wednesday statement that it needed to raise $2.25 billion to shore up its balance sheet. Signature, which also had a strong crypto focus but was much larger than Silvergate, was seized on Sunday evening by banking regulators.

Signature and Silvergate were the two main banks for crypto companies, and nearly half of all U.S. venture-backed startups kept cash with Silicon Valley Bank, including crypto-friendly venture capital funds and some digital asset firms.

The federal government stepped in on Sunday to guarantee all deposits for SVB and Signature depositors, adding confidence and sparking a small rally in the crypto markets. Both bitcoin and ether are nearly 10% higher in the last 24 hours.

According to Nic Carter of Castle Island Ventures, the government’s willingness to backstop both banks signifies that it’s back in the mode of providing liquidity, rather than tightening, and loose monetary policy has historically proven to be a boon for cryptocurrencies and other speculative asset classes.

But the instability once again showed the vulnerability of stablecoins, a subset of the crypto ecosystem investors can typically rely on to maintain a set price. Stablecoins are supposed to be pegged to the value of a real-world asset, such as a fiat currency like the U.S. dollar or a commodity like gold. But unusual financial conditions can cause them to drop below their pegged value.

A lot of crypto’s problems in the last year originated in the stablecoin sector, beginning with TerraUSD’s collapse last May. Meanwhile, regulators have been homing in on stablecoins in the last few weeks. Binance’s dollar-pegged stablecoin, BUSD, saw massive outflows after New York regulators and the Securities and Exchange Commission applied pressure on its issuer, Paxos.

Over the weekend, confidence in this sector again took a hit as USDC – the second-most liquid U.S. dollar-pegged stablecoin – lost its peg, dropping below 87 cents at one point on Saturday after its issuer, Circle, admitted to having $3.3 billion banked with SVB. Within the digital assets ecosystem, Circle has long been regarded as one of the adults in the room, boasting close connections and backing from the world of traditional finance. It raised $850 million from investors like BlackRock and Fidelity and had long said it planned to go public.

DAI, another popular dollar-pegged virtual currency that is partially backed by USDC, traded as low as 90 cents on Saturday. Both Coinbase and Binance temporarily paused USDC-to-dollar conversions.

On Saturday, some traders began swapping their USDC and DAI for tether, the world’s biggest stablecoin with a market value of more than $72 billion. Tether’s issuing company did not have any exposure to SVB and it’s currently trading above its $1 peg as traders flock to safer pastures, even though tether’s business practices have been called into question, as have the state of its reserves.

The stablecoin market began to rebound as of Sunday evening after Circle released a blog post saying that it would “cover any shortfall using corporate resources.” Both USDC and DAI have since shifted back toward their dollar peg.

Now that it is clear that SVB depositors will be made whole, Carter tells CNBC that he expects USDC to trade at par.

In the long run, the shutdown of the crypto banking trifecta could present problems for bitcoin, the world’s largest cryptocurrency, with a market value of $422 billion.

The Silvergate Exchange Network (SEN) and Signature’s Signet were real-time payment platforms that crypto customers considered core offerings. Both allowed commercial clients to make payments 24 hours a day, seven days a week, through their respective instant settlement services.

“Bitcoin liquidity and crypto liquidity overall will be somewhat impaired because Signet and SEN were key for firms to get fiat in on the weekend,” said Carter, who added that he is hopeful that customer banks will step in to fill the void left by SEN and Signet.

“These were the two most bitcoin-friendly banks, supporting the lion’s share of fiat settlement for bitcoin trades between trading counterparties in the U.S.,” wrote Mike Brock in a post on social media app Damus. Brock is the CEO of TBD at Block, a unit which focuses on cryptocurrency and decentralized finance.

Although Carter thinks the Fed stepping in to guarantee depositors of SVB will prevent a larger bank run on Monday, he says it is still dispiriting to see the three largest crypto-friendly banks taken offline in a matter of days.

“There are very few options now for crypto firms and the industry will be strapped for liquidity until new banks step in,” said Carter.

Mike Bucella, a longtime investor and executive in the crypto space, says that many in the industry are pivoting to Mercury and Axos, two other banks that cater to startups. Meanwhile, Circle has already publicly said that it is shifting is assets to BNY Mellon now that Signature bank is closing.

“Near-term, crypto banking in North America is a tough place,” said Bucella. “However there is a long tail of challenger banks that may take up that slack.”