Crypto Funds Banking On USDC Recovery Despite SVB Contagion

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USDC Cryptocurrency Price Update: The digital asset market showed signs of recovery this week amidst worries of liquidity issues due to the bankruptcy of two U.S. banks —  Silvergate and Silicon Valley Bank. The depegging of USD Coin (USDC) brought back memories of the Terra stablecoin terraUSD (UST) in 2022. At one point, USDC’s value dropped by 12 cents because of its exposure to the Silicon Valley Bank. Circle, the USDC operator, stated that it had ties to around $3.3 billion worth of stablecoin reserves in the bank.

Also Read: Vitalik Buterin Backing USDC Despite Heavy Depegging?

This announcement from Circle caused the coin’s value to diminish, making it lose its peg to the U.S. Dollar. This followed cryptocurrency exchange Coinbase

halting USDC-USD conversions on its platform.

Crypto Funds Ready To Take Advantage Of Lower Prices?

Despite the stablecoin depegging arising from panic selling, some crypto funds appear to be confident of a revival in due time. Certain crypto funds, including one belonging to Vitalik Buterin, are reportedly stocking up on USDC at its current price, which is almost nine cents lower than its peg. Firms such as Jump Trading, Wintermute Trading, Genesis Trading and BlockTower Capital are said to have bought USDC, just before the weekend bank holiday, as seen on the chain data.

Meanwhile, the Bitcoin price has been exhibiting positive signs as it has recovered by around 2.50%, after a few days of downward momentum that began with the turmoil around Silvergate Capital. On the other hand, the selloff in the stablecoin triggered a demand for another major stablecoin, Tether (USDT), which saw a 17% increase in its daily trading volume.

Also Read: Binance Changing To Multiple Stablecoins, No Automatic Conversion

On Friday, California regulators took control of the Silicon Valley Bank and assigned the FDIC with the task of managing insured deposits, which will be available on Monday, 11 March 2023. This most recent stablecoin depegging comes at a time when U.S. regulatory bodies such as the U.S. Securities and Exchange Commission (SEC) have been taking enforcement action against crypto companies.

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