USD Coin

Silicon Valley Bank went bankrupt this week, very abruptly, after a bank run followed bad news about refinancing issues of the bank.
The bank was used by a lot of tech firms, and als some crypto projects were customers of the bank.

So was Circle, the firm behind USD Coin, they had substantial deposits with the bank. Which are part of the reserves backing the stable coin USD Coin is.
Resulting in a loss of the 1 dollar peg. The value tanked to 0,89 USD, and slowly climbs back up to a current value of 0,97 USD.

infection

This is always the issue when a bank goes bankrupt, a risk of infection to other banks and companies who have reserves or outstanding loans with the bank. It can make those banks or companies switch from healthy to almost bankrupt in an instance.
Especially if the stock markets react to the news and start dumping the stock…
This kind of happened with USD Coin where a lot of USDC got dumped on the market. Resulting in a tanking of the value of USDC.

This created a virtual loss of value of 5 billion dollars of value in USDC. As there are 41 billion USDC in circulation.

It remains to be seen how the markets will react in the coming days and weeks, and when it comes clear how big the losses of Circle exactly are at Silicon Valley Bank.

Again… Interesting times!

Sincerely,

Pele23