USDC Recovers to $0.95, Bitcoin Retakes $20K Mark (Weekend Watch)

In the last 24 hours, the cryptocurrency market saw a bit of a breather as it managed to regain around $16 billion in terms of total capitalization.

That said, the turmoil around USDC continues, although the stablecoin recovered to around $0.95 as Circled issued a somewhat reassuring statement.

USDC recovers to $0.95

USDC’s depeg has been the hottest topic in the cryptocurrency market over the past 48 hours. It is the second largest stablecoin by total capitalization and the fifth largest cryptocurrency overall.

As a stablecoin, USDC’s price should never fluctuate from $1, but yesterday it crashed and burned below $0.90 for the first time. This happened Silicon Valley Bank – one of the largest financial institutions in the fintech world, was essentially shut down by regulators.

It turns out that Circle has a whopping $3.3 billion of the cash reserves backing USDC at SVB, suggesting that until the bank’s problems are resolved (if), USDC is not backed 1-to-1 by the USD.

This sent the cryptocurrency lower, but Circle was able to release a statement assuring that even if the money at SVB is lost, it will cover any shortfall:

In such cases, Circle, as required by law and under stored value remittance regulation, will stand behind the USDC and cover any shortfalls using corporate resources, involving external capital if necessary.

This appears to have calmed sentiment as USDC recovered to around $0.95 at the time of writing.

Bitcoin takes back $20,000

The above has also had an impact on the wider cryptocurrency market. Bitcoin’s price has been able to regain the important technical and psychological level of $20,000 and is currently trading above it, as shown in the chart below:

BTC is up about 1.7% on the day. Ethereum has also rallied around 2.1% over the past 24 hours as concerns about the NYAG claiming ETH is a security seem to have started to dissipate.

MATIC also pushed above $1 and is up 4.2% on the day. Interestingly, USDC – a stablecoin, is the best performer among the top 10 cryptocurrencies by market cap.