Last night, the BTC/USDC trading pair suddenly rallied towards the $50,000 mark, a price range in which Bitcoin has fluctuated since November 2021.
Source: Binance
The reason for this unexpected move is that Circle’s stablecoin is in danger of running out of liquidity.
Previously, USDC lost its $1 lockup after Circle admitted it could “lose everything” as a whopping $3.3 billion was trapped in Silicon Valley Bank’s USDC reserves, which accounted for 8.25% of total assets of $40 billion. This confused the community, with a large number of users looking to transfer assets to other stablecoins. At the same time, Defi mining pools also ran out of USDC.
In the midst of the crisis, Binance shut down the USDC to BUSD exchange function to reduce the exchange pressure on the exchange. After that, Coinbase also stopped the USDC-USD exchange until Bank of America reopened.
However, Circle confirmed that it can get back all the money stuck on SVB, committed to offsetting the balance sheet deficit (if any), and resumed the 1:1 exchange rate for US dollars today. Additionally, the company has created a record $407.8 million in USDC over the past few hours, despite the risk of potentially buying back 10-30% of the stablecoin’s total supply, worth as much as $400-120 million.
In addition, Binance also announced the opening of USDC/USDT futures trading with a leverage of up to 30 times.
All of this has helped USDC close to the closing price of $1, currently trading at $0.98 at press time.
Source: TradingView
- Circle minted a record $407.8 million in USDC about an hour before DAI supply increased by 1.4 billion
- Circle may face a repurchase of 10-30% of the total USDC this week, worth $400-120 billion
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Bitcoin Magazine
