USDC depeg – Everything we know so far as contagion spreads from TradFi banking

2 years ago

What we cognize truthful acold astir the SVB illness and USDC/DAI depeg (updated):

Crypto steadfast Circle reveals $3.3 cardinal stuck successful SVB
DAI/USDC depeg arsenic stablecoin unit continues aft Silicon Valley slope collapse
Binance suspended USDC conversions owed to volatile marketplace conditions
Coinbase suspended USDC conversions “over the play portion banks are closed”
SVB contagion: crypto firms wounded see BlockFi, Circle, and Avalanche
Circle $1 cardinal successful nett redemptions since the SVB collapse
On Saturday, March 11, during Asian day hours, DAI, the decentralized stablecoin of MakerDAO, reached its lowest worth ever astatine 0.88 cents
Contagion is thought to beryllium portion of “Operation Choke Point,” a remnant from Obama-era Justice section policy
Tether, the stablecoin USDT, surged momentarily connected quality it is unaffected by SVB

TradFi banking contagion

A time aft the west-coast slope Silicon Valley Bank (SVB) was placed into national receivership and b some deposits and withdrawals ceased, Circle, the issuer of the stablecoin USDC, mislaid its $1.00 peg to the US dollar, prompting fears of a tally connected the stablecoin akin to what happened during the wind-down of UST successful the aftermath of its depegging from Terra Luna.

Overnight, USDC mislaid 14 cents from its $1.00 peg, tumbling to arsenic debased arsenic .86 cents.

“Following the confirmation astatine the extremity of contiguous that the wires initiated connected Thursday to region balances were not yet processed, $3.3 cardinal of the ~$40 cardinal of USDC reserves stay astatine SVB,” Circle said successful a tweet.

“Like different customers and depositors who relied connected SVB for banking services, Circle joins calls for continuity of this important slope successful the U.S. system and volition travel the guidance provided by authorities and Federal regulators.”

That quality followed fears that the contagion from the SVB illness would besides impact different crypto institutions, which it has, with some BlockFi and Avalanche besides revealing connections to the distressed bank.

The quality has prompted renewed fears that fiat on/off ramps successful crypto tin go “choke points” for the authorities to target the crypto manufacture astatine large.

Twitter Reactions

LOOK OUT BELOW pic.twitter.com/Cm72Ec854S

— beeple (@beeple) March 10, 2023

CZ took to Twitter to speculate if it was clip for exchanges similar Binance to commencement buying up distressed banks.

Leveraged positions unfastened up

Some traders are purchasing USDC successful anticipation of a imaginable 10% summation if the tokens instrumentality to the intended dollar mark. These traders are betting connected this gradual betterment to $1 owed to the comparatively inexpensive terms of USDC. Leveraging could perchance amplify returns for these traders, arsenic evidenced by the futures backing rates connected Bybit, which reached arsenic precocious arsenic 0.3% connected Saturday morning.

Opened $114k $USDC agelong astatine $0.87

Lets go.

You cognize crap is hitting the obstruction erstwhile you are lev trading a "stable" coin https://t.co/TPEUbfM80b pic.twitter.com/Yl3KnGBlXf