The USDC coin has regained its $1 peg again after falling a few cents short two days ago. In the early hours of Saturday, USDC traded for as low as $0.88 per coin. This massive decline in the stablecoin’s price was due to its links with the Silicon Valley Bank.
The USDC coin is issued by Circle and backed by fiat reserves and some non-cash collateral. Notably, over $4 million worth of Circle’s reserves were held with the Silicon Valley Bank. However, Silicon Valley Bank (SVB) went on a bank run. The US bank could no longer meet the operation requirements laid out by financial regulators in the United States. This massive collapse had a negative chain impact on USDC, and the stablecoin de-pegged.
To the surprise of many, USDC’s de-pegging did not last for so long. Despite the FUD in the ecosystem, the cryptocurrency quickly traded above $0.94 for most of Sunday. The USDC coin has now settled around the $1 region.
How did the USDC Coin Regain its Peg?
Shortly after fear and uncertainty got the better of USDC holders, Circle released several press statements to calm the FUD. Circle assured users that it would cover any USDC shortfalls with corporate resources. Further, the company said it would resume operations today after halting operations over the weekend.
Users were assured they could redeem every 1 USDC for 1 dollar despite the ongoing catastrophe. Jeremy Alley, the CEO of Circle, also informed users that the US government and Financial regulators were on set to mitigate the risks of users who banked with SVB.
Jeremy Alley said: “We will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust, automated USDC settlement and reserve operations with the highest quality and transparency.”
Silver Gate Bank and Signature Bank Also Shut Down
The last few days have been a rollercoaster for crypto fans. A million and one big events have happened in no time. While all the focus seems to be on Silicon Valley Bank, Silver Gate Bank, and Signature Bank were also shut down.
One notable fact about all three banks is that they are crypto-friendly and have links with numerous crypto organizations. The bank run immediately impacted the entire cryptocurrency market, not just the USDC coin, as crypto prices tumbled in the past week. Interestingly, the price crash did not last a moment as Bitcoin and altcoins recovered swiftly.
Bitcoin currently trades above $24,000, and crypto bulls are currently ruling. Bitcoin’s price appreciation is a massive 14% in the last 24 hours. The general crypto market capitalization is around $1.08 trillion, a week after falling below the trillion-dollar mark.