The price of the BTC/USDC trading pair unexpectedly rose to $50,000 on March 13 in the early morning. This was the price range of November 2021 before the whole cryptocurrency market entered the current bear season.
The reason for the aforementioned flash action is that USDC, Circle's stablecoin, may soon run out of liquidity.
On March 11, after the owner Circle admitted to having a significant exposure to Silicon Valley Bank, the USDC value dropped below the $1 mark and underwent a significant depeg. The corporation is freezing up to $ 3.3 billion in cash, much beyond the neighborhood's estimate of $ 1 billion. This indicates that it comprises 8.25% of the $40 billion in assets that are maintained as reserves for USDC.
As a result of this knowledge, the community went into a panic, and users rushed to withdraw or switch to other stablecoins. At the same time, Curve and other DeFi systems' USDC-rich pools have also run dry.
Another surprise came when Binance shut down the USDC to BUSD conversion option at that time to lessen the burden on the exchange from conversions. Following closely behind, Coinbase likewise halted USDC to USD trades. Due to the weekend, US banks are currently open for business.
With the USDC price losing its peg severely and plunging as low as $0.882, several stablecoins on the market have also been impacted. This stablecoin has never had a depeg this severe—even worse than when LUNA-UST or FTX crashed.
Circle recommenced converting to USD this morning at the same rate of 1 USDC to 1, after confirming that it could recover the trapped funds and pledging to make up the shortfall in collateral assets. USD. As a result, stablecoin USDC has climbed back to the $1 level.
Cross River Bank has been chosen by Circle as its new partner for automatically minting and redeeming USDC for consumers, which was also revealed by the company. Then, Nansen, the stablecoin issuer that generated an additional 407.8 million USDC, updated the most recent data. The total net change increased to $463.8 million because to this week's greatest minting.
Moreover, Binance "takes advantage of this opportunity" by launching USDC/USDT futures trading with a 30x maximum leverage. Formerly, with leverage up to 50x, OKX, Huobi, Bitmex, and Bybit all behaved identically.
To increase liquidity and "rescue" Circle's stablecoin, the exchange also established spot trading pairs for BNB/USDC, BTC/USDC, and ETH/USDC the day before.