Bitcoin and Ether Recover After Steep Friday Fall
Bitcoin and Ether rebounded by up to 4% in the last 24 hours, showing early signs of market stabilization after Friday’s market collapse caused by the Silicon Valley Bank’s failure. The bank’s collapse spread contagion risks to crypto markets, particularly Circle, the USD Coin-issuer, which was exposed to the bank. However, other cryptocurrencies did not show significant gains, suggesting that traders were not willing to take risks on lesser-known tokens.
Liquidations and USDC Fears
On Friday, regulators shut down SVB, leading traders to panic sell their token holdings as USDC fell to as low as 87 cents early Saturday. This resulted in the liquidation of more than $200 million worth of crypto-tracked futures in the last 24 hours, with bitcoin and ether bearing the most significant losses. Liquidation occurs when a trader has insufficient funds to keep a leveraged trade open.
Brushing Off USDC Fears
Despite the sell-off, some market analysts remain optimistic, brushing off fears regarding USDC’s longevity. They pointed out that the token has US Treasury backing, and 80% of its assets are in the form of 6mn US T-bills. North Rock Digital co-founder Hal Press tweeted that Circle’s reserves were held in U.S. Treasury bills, meaning that the theoretical floor price of USDC was 77 cents. Additionally, the FDIC-insured nature of SVB suggests that concerns about the longevity of USDC are overblown.
Source: CoinDesk
