USDC Feeling Intense Pressure Despite Fed Action To Halt SVB Contagion
March 13 2023 - 6:24AM
NEWSBTC
USDC and other cryptocurrencies were having a rough trading session
Monday following an announcement from U.S. authorities outlining
measures to minimize the impact of the collapse of Silicon Valley
Bank. Concerns regarding Circle’s $3.3 billion in USDC reserves
held at SVB, which was shuttered by the California Department of
Financial Protection and Innovation on March 10, drove the price of
the stablecoin down to as low as $0.87 over the weekend. Circle
also has reserves at the recently collapsed Silvergate, the amount
of which is undisclosed. Related Reading: Cardano Sheds 23% In
Value As ADA Woes Pile Up – Here’s Why Circle CEO Praises US
Government For Stepping In On Sunday, Circle’s chief executive
Jeremy Allaire tweeted his support for the government and Federal
Reserve’s $25 billion funding initiative to help banks with
liquidity issues. “100% of USDC reserves are also safe and secure,
and we will complete our transfer for remaining SVB cash to BNY
Mellon,” Allaire wrote. Update thread on USDC We were heartened to
see the US government and financial regulators take crucial steps
to mitigate risks extending from the fractional banking system.
100% of deposits from SVB are secure and will be available at
banking open tomorrow. — Jeremy Allaire (@jerallaire) March 12,
2023 “As previously shared, liquidity operations for USDC will
resume at banking open tomorrow morning,” Allaire said. Meanwhile,
at the time of writing, Bitcoin’s price was up from $20,334 to
$22,111 in just 24 hours. When USDC Depegs USDC depegging
from the U.S. dollar would have significant implications for the
cryptocurrency market and the broader economy. In this scenario,
the value of USDC would no longer be directly tied to the U.S.
dollar and could fluctuate independently based on market forces.
The depegging of USDC would likely lead to significant volatility
in the cryptocurrency market, as traders and investors seek to
adjust their positions to account for the change in value. It could
also have broader implications for the use of stablecoins in
commerce, as merchants may be hesitant to accept a currency that is
no longer pegged to a stable and widely accepted currency like the
U.S. dollar. The depegging of USDC could also have regulatory
implications, as regulators may seek to scrutinize stablecoins more
closely in the wake of such a significant event. Additionally, the
depegging could lead to increased competition among stablecoins as
users seek out stablecoins that are more reliable and less prone to
volatility. BTCUSD is up down 1.7% in the last seven days and
currently trading at $22,038 on the daily chart | Chart:
TradingView.com Related Reading: Shiba Inu Is The Crypto Of Choice
By Top 100 Ethereum Whales – Here’s Why USDC Feels The Pinch The
crypto markets experienced a decline last week due also to the
closure of Silvergate, while the collapse of Silicon Valley Bank
also had a direct impact on the industry. On Sunday night, U.S.
regulators guaranteed all depositors would be safe after the fall
of Santa Clara, California-based SVB and announced emergency
measures to stem the spread of the crisis. U.S. Treasury Secretary
Janet Yellen, Federal Reserve Chair Jerome Powell, and Federal
Deposit Insurance Corp. Chairman Martin Gruenberg made the
announcement in a joint statement. Despite the announcement, USDC
still felt the pinch from the latest developments surrounding the
crypto market. According to data provided by CoinGecko, the price
of one USDC is 98 cents as of this writing. Kraken’s USDC/USD
exchange rate of 99.22 cents is the closest to its previous level
of parity of any market. Futures contracts for USDC-USDT on Binance
are currently trading at 98.72 cents, a fraction higher than the
current spot price of 98 cents, suggesting that some investors are
hopeful that the peg will be reinstated. -Featured image from
Manhattan Gold & Silver
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