In the past 24 hours, the cryptocurrency market has taken a bit of a breather as it managed to recover around $16 billion in terms of total capitalization.
That said, the turmoil around USDC continues, although the stablecoin rallied to around $0.95 as Circled issued a somewhat reassuring statement.
USDC recovers at $0.95
The USDC depeg has been the hottest topic in the cryptocurrency market for the past 48 hours. It is the second largest stablecoin by total capitalization and the fifth largest cryptocurrency.
As a stablecoin, the price of USDC should never fluctuate from $1, but yesterday it crashed and burned below $0.90 for the first time. It happened Silicon Valley Bank – one of the largest financial institutions in the fintech world, was essentially shut down by regulators.
It turns out that Circle holds $3.3 billion of USDC-backing cash reserves at SVB, suggesting that until the bank’s problems are resolved (if), USDC is not supported 1 to 1 by the USD.
This drove the cryptocurrency down, but Circle was able to release a statement, reassuring that even if SVB’s money is lost, they will cover any shortfall:
In this case, Circle, as required by stored-value money transmission law and regulations, will stand behind the USDC and cover any shortfalls using company resources, involving outside capital if necessary.
This appears to have calmed sentiment as USDC is back to around $0.95 at the time of this writing.
Bitcoin recovers $20,000
The above has also had an impact on the broader cryptocurrency market. The price of Bitcoin was able to recover the important technical and psychological level of $20,000 and is currently trading above it, as shown in the chart below:
BTC is up around 1.7% on the day. Ethereum is also up around 2.1% in the past 24 hours as it looks like concerns over the NYAG claiming ETH is a security have started to dissipate.
MATIC also pushed above $1 and is up 4.2% on the day. Interestingly enough, the best performer among the top 10 cryptocurrencies by market capitalization is USDC – a stablecoin.
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Cryptocurrency charts by TradingView.