USDC has been hit with a bearish wave following news of the collapse of Silicon Valley Bank on March 11. The stablecoin issuer Circle had revealed that it had $3.3 billion in deposits with the defunct bank, contributing to uncertainty regarding USDC. 

USDC Price Falls Below $0.90 For The First Time

Given the doubts about the reserves of USDC, the coin’s price fell to an all-time low of $0.8774, according to data from CoinMarketCap. Onchain data reveals that investors are liquidating their USDC holdings for other assets. 

Rival stablecoin USDT has received a significant inflow of volumes in the past 24 hours, which is unsurprising. The collapse of Terra USD (UST) in May 2022 has served as a cautionary tale for many crypto holders who do not want to go through a similar situation with USDC. 

Meanwhile, Circle has tried calming USDC holders by assuring them that their funds remain safe. In a tweet on March 11, Circle revealed that Silicon Valley Bank was one of the six banking partners that it uses to manage 25% of USDC reserves held in cash. It further added that it was awaiting clarity from FDIC regarding how SVB insolvency would affect depositors. 

Nevertheless, several crypto firms have limited their exposure to USDC. Binance announced that they would temporarily suspend their auto-conversion of USDC to BUSD. Coinbase followed suit by pausing USDC conversion to USD until Monday. The exchange noted that during heightened activities, conversions rely on USD transfers from banks completed during banking hours.

Maker DAO also approved an emergency proposal to reduce the USDC collateral of its DAI stablecoin. It was decided that the debt ceiling of several liquidity pools, including USDC, will be lowered to zero DAI, which means that they cannot continue issuing new coins. In addition, in what they call “stability modules” exposed to USDC, the daily issuance limit of 950 million DAI will be reduced to only 250 million.

What Next For USDC

At the time of writing, USDC price has recovered by 3% in the past 24 hours and is trading at $0.9552. However, the 24-hour trading volume has reduced by 31% to $14

The current crypto market sentiment is mixed, with some people highlighting the problems of the centralization of stablecoins. Likewise, some seek to take advantage of this situation to get USDC at a discount. They believe that USDC will return its peg to the dollar, and they can profit from the current spread. As can be seen, opinions are diverse, and it remains to be seen how the stablecoin will fare in the coming days. 

#usdc #Binance #crypto2023 #koinmilyoner #buildtogether

A stable U.S. banking system where deposits are safe and accessible is essential to the global financial system and to the operations of every fiat-backed stablecoin.

That was recognized by the U.S. government’s actions on Sunday, March 12, when the U.S. Treasury, Federal Reserve and the FDIC together stepped in to ensure that ordinary depositors were not harmed by the failures of Silicon Valley Bank and Signature Bank.

Since the failures of Signature Bank and Silvergate Bank, our core transaction banking partners, our teams have been working around the clock to restore USDC liquidity operations, including bringing on new transaction banking partners. We began processing minting and redemption requests on Monday morning, March 13, when the U.S. banking system re-opened, and are currently working through the backlog. We have more to do here, including adding new transaction banking partners with 24/7/365 capability, and we will keep our community posted on our progress.

Yesterday, March 13, Circle has redeemed $2.9B USDC and minted $0.7B USDC.

Moreover, as part of our ongoing initiatives to strengthen the USDC reserve, we now hold the cash portion of the reserve at BNY Mellon, except for limited funds held at transaction banking partners in support of USDC minting and redemption. The majority of the reserve is invested in the Circle Reserve Fund, managed by BlackRock and custodied at BNYM, which is principally comprised of short dated U.S. Treasuries.

#BTC #usdc #circle #SVB #CryptoFearandGreed