My little brain sees this as a reason for failure here.
SVB had liquid assets (bonds) that it could sell to meet the demands of the depositors, but those assets fell in value creating losses. The bank was forced to crystalise those losses because it had no cash buffer to fall back on.
If some substantial part of the liquidity had been held as cash this wouldn't have happened.
The worst part of it, is that once interest rates started raising and they started seeing the obvious (but not critical!) impact on their long-maturity bonds, they simply could have switched to shorter-maturity bonds and be totally fine.
SVB had liquid assets (bonds) that it could sell to meet the demands of the depositors, but those assets fell in value creating losses. The bank was forced to crystalise those losses because it had no cash buffer to fall back on.
If some substantial part of the liquidity had been held as cash this wouldn't have happened.