Stablecoin USDC breaks dollar peg after revealing $3.3 bln Silicon Valley Bank exposure - what's next for the entire cryptoverse?
Hello InformationWar platform! It's been a great week and it's quite obvious that the entire cryptoverse is still wallowing in the current bear market. Today's news will focus on the recent happenings around Silicon Valley Bank and how it's crash has affected stablecoin USDC.
Everyone around the cryptoverse is talking about the fall of one of Uk's foremost banks and how it has pulled the USDC out of it's dollar peg.
USD Coin (USDC) lost its dollar peg and slumped to an all-time low on Saturday after Circle, the U.S. firm behind the coin, revealed that some of the reserves backing it were held at Silicon Valley Bank.
Circle has $3.3 billion of its $40 billion of USDC reserves at collapsed lender Silicon Valley Bank, the company said in a tweet on Friday.
At the early hours of Saturday USDC broke it's 1.1 dollar peg to about $0.80, although it is recovering slightly and at about 1102 GMT it moved to $0.90. This incident means that it has gone to its all time low.
Silicon Valley Bank collapsed on Friday in the largest U.S. bank failure since the 2008 financial crisis, roiling global markets and stranding billions of dollars belonging to companies and investors.
Stablecoins are currencies that back the fiat currency backed by a central government rather than a physical commodity such as gold . For instance, the USDC is backed by the USD.
Used in cryptocurrency trading, they have surged in value in recent years. USDC is the second-biggest stablecoin with a market cap of $37 billion. The largest, Tether, has a market cap of $72 billion, according to CoinGecko.
CoinGecko pointed out that USDC's all time low prior to today's crash was in 2018 When it became $0.97 and in 2022 when it fall to $0.99 when cryptocurrency markets were roiled by the collapse of crypto hedge fund Three Arrows Capital.
Boston-based Circle said last week it had moved a "small percentage" of USDC reserve deposits held at Silvergate to its other banking partners.
The chief executive of cryptocurrency exchange Binance said in a tweet on Friday it had no exposure to Silicon Valley Bank, as did Tether Chief Executive Paolo Ardoino.