News Bit: USDC Depegs From One Dollar

Republished By Plato

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What Happened

Circle Internet Financial’s USDC stablecoin, the second-largest stablecoin with a market cap of $42 billion, temporarily lost its peg to the U.S. dollar due to contagion from the collapse of Silicon Valley Bank.
The USDC/USDT trading pair dropped as low as $0.94 on Kraken, the lowest price since April 2021, but recovered to around $0.984 on Saturday.
Some of USDC’s cash reserves were parked at Silicon Valley Bank, which was shut down by regulators on Friday after suffering a run on deposits.
Circle said that $3.3 billion in cash deposits remained at Silicon Valley Bank, representing about 8% of the total reserves backing USDC.

Role of USDC

Concerned investors redeemed over $1 billion of USDC tokens on Friday, causing the stablecoin to temporarily lose its dollar peg on some exchanges and pushing the largest stablecoin swap pool on Curve into heavy imbalance.
Stablecoins like USDC are a crucial part of the crypto industry’s foundation, and when they deviate significantly from their peg, it raises concerns about their financial footing.

Zooming out – What happened to Silicon Valley Bank

Silicon Valley Bank collapsed on Friday, March 10th, 2023, following a bank run and a capital crisis, which resulted in the second-largest failure of a financial institution in US history.
The FDIC took control of the bank and will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
The wheels started to come off on Wednesday when SVB announced it had sold securities at a loss and would sell new shares to shore up its balance sheet.
Key venture capital firms reportedly advised companies to withdraw their money from the bank, triggering a panic.

This is a developing story.

This article is published on BitPinas: News Bit: USDC Depegs From One Dollar

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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