Due to the issuer Circle Internet Finance Ltd.’s exposure to the failed Silicon Valley Bank, the second-largest stablecoin in the cryptocurrency market declined from its intended $1 peg on Saturday, trading as low as 81.5 cents.
The Dollar Coin, or USDC, is a cornerstone of the cryptocurrency market and is designed to maintain a constant $1 value that is entirely supported by cash reserves and short-term Treasury securities. Yet, Silicon Valley Bank, which has recently become one of the greatest American bank failures in recent memory, holds $3.3 billion of that roughly $40 billion stash.
Investors are anticipating for details regarding the return of deposits after regulators seized the bank on Friday. As a result, USDC lost value and, as of 9:02 a.m., was trading at roughly 92 cents.
on Saturday in London. Lesser stablecoins like DAI and Pax Dollar dropped from their pegs as well, indicating general unease.
The stablecoin Tether, which maintained its value of $1, has not yet been affected by the concerns. Tether’s reserves have already drawn criticism. The larger cryptocurrency markets have had a difficult week and were struggling. Saturday: In contrast to lesser tokens like Solana and Avalanche, which were in the red, Bitcoin fluctuated between profits and losses.
on Saturday in London. Lesser stablecoins like DAI and Pax Dollar dropped from their pegs as well, indicating general unease.
The stablecoin Tether, which maintained its value of $1, has not yet been affected by the concerns. Tether’s reserves have already drawn criticism. The larger cryptocurrency markets have had a difficult week and were struggling. Saturday: In contrast to lesser tokens like Solana and Avalanche, which were in the red, Bitcoin fluctuated between profits and losses.
According to data from CoinGecko, USDC has a market cap of around $37 billion and a 41 billion token circulating supply. According to blockchain analysis company Nansen, a net $2 billion worth of USDC was redeemed in the previous day. Bloomberg-compiled data showed that USDC traded as low as 81.5 cents.
The purpose of stablecoins like USDC is to maintain a predetermined value against another highly liquid asset, such as the US dollar. They can take many different shapes, and some, like Circle’s, are supported by cash and bond reserves. As they switch between cryptocurrency deals, investors frequently keep money in stablecoins.
Coinbase Global Inc., a US-based cryptocurrency exchange, announced that it would “temporarily pause” the conversion of USDC into US dollars over the weekend and resume it on Monday when banks open as the selloff in USDC got worse.
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