Friday, March 24, 2023

Cryptocurrencies are flying more than 16% amid financial panic

Major cryptocurrencies came under pressure on Monday after US officials announced plans to deal with the fallout from the Silicon Valley Bank (SVB) bankruptcy and said the “stablecoin” USD Coin issue remained against the dollar.

How much are Bitcoin, Ethereum and other cryptocurrencies traded?

Bitcoin, the main cryptocurrency, flies more than 16% and exceeds $24,000, while Ethereum makes 11% and breaks $1,600.

US authorities launched emergency measures on Sunday to safeguard confidence in the banking system after losses at SVB threatened to trigger the financial crisis and said bank customers would have access to their deposits from Monday.

The USD Coin, also known as USDC, recovered to $0.9917 from an all-time low of $0.87 on Saturday, well below expectations of a 1:1 parity against the dollar. The drop is due to concerns about the group’s exposure to SVB, which exits the USDC firm.

Jeremy Allaire, the group’s chief executive, tweeted on Sunday that the company’s $3.3 billion USDC deposit reserve – about 8% of its total – held at SVB Bank was fully available when American banks opened on Monday.

Find out more about HSBC support: buy one pound sterling at SVB’s UK headquarters

Stable currencies like USDC, the second largest market size, are crucial cognizance in the world of cryptocurrency trading. These are designed to maintain a stable value and are usually backed by traditional asset reserves, such as dollars, bonds, and gold.

Nerves are also subject to cryptocurrents.

In pre-opening trading for the US markets, cryptocurrency miners Litis Blockchain and Marathon Digital, cryptocurrency exchange Coinbase Global and the program Microstrategy Inc also gathered from last week to gain between 6,5% and 10%.

DAI Crash

USD Coin (USDC), the second largest stablecoin by market capitalization, fell below its expected price of $1 after Circle, its issuing firm, revealed part of its reserves in the failed Silicon Valley Bank.

USDC providers said Friday afternoon they had unsecured money on deposit with Silicon Valley Bank (SVB), a major California-based bank that was shut down by regulators earlier in the day. The group determined shortly after that the amount of reserves in the custody of the bank was US$3.3 billion, but be aware that savers are not at risk.

The company said in a tweet early Saturday morning (GMT-3) that it was unable to withdraw its funds from the bank, which constitute more than 8% of USDC’s $40 billion in reserves.

The group’s revelations raised alarm among investors, who rushed to exchange USDC for other assets. The currency, which is expected to be held at 1-to-1 parity with the US dollar, sank to a record low of $0.87 on Saturday.

A few minutes later, several cryptocurrency exchanges, including Coinbase and Binance, announced that USDC exchanges were closed for the time being due to market conditions and high activity levels. But the market is expected to stabilize in the next few hours.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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