The abrupt collapse of Silicon Valley Bank has hurt the value of the world’s fifth-largest cryptocurrency and fueled fears of a potential domino effect among Web3 companies. On Saturday morning, the USD coin fell to a record low of $0.87 after Circle, the company that manages the stablecoin, that $3.3 billion of the approximately $10 billion in cash reserves in support of USDC was held by SVB.
As , the decline is unprecedented. As a stablecoin, USDC’s value is said to remain stable thanks to its peg to the US dollar. Accordingly , USDC’s previous all-time low was around $0.97 in 2018. More recently, the currency fell after the . to $0.99. At the time of writing this article, USDC is valued at around $0.95.
Previously, people argued that USDC just lost its tie to the less deep exchanges (Kraken, Gemini).
down almost everywhere now. gonna be a tough weekend i think. pic.twitter.com/4BCW6Lael9
— Molly White @ SXSW (@molly0xFFF) March 11, 2023
Creator Molly White suggests that this would be the impact of a sustained USDC decline A handful of other stablecoins, including FRAX and DAI, use USDC as collateral. On Friday circle it would “continue to operate as normal” while awaiting further information on what will happen to SVB’s customers. “On Thursday we had initiated transfers of these funds to other banking partners. While these transfers had not been settled as of close of business Friday, we remain confident in the FDIC’s management of the SVB situation and stand ready to receive these funds,” Circle said Saturday, adding that $5.4 billion Dollars of its cash assets are held by BNY Mellon, “one of the largest and most stable financial institutions in the world.”
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