The crypto news is abuzz with the recent volatility of USDC, a stablecoin pegged to the US dollar. The USDC panic was triggered by the bankruptcy of Silicon Valley Bank to which the USDC issuer has exposure. It is as yet unclear how much customers will be able to recover, which has led to an increase in demand for USDC withdrawals on various cryptocurrency exchanges.
Crypto exchanges can expect high pressure
According to a recent tweet, there is currently 5.16 billion USDC on Binance, one of the largest cryptocurrency exchanges in the world. Crypto.com, OKX, Coinbase and Kraken also have a lot of USDC on their balance sheets, with 785 million, 420 million, 250 million and 235 million respectively. Once the banks resume operations today, these exchanges are likely to face a huge demand for USDC withdrawals, especially Binance.
There are 5.16b in USDC on the Binance now, and Cryptocom OKX Coinbase Kraken ranks second to fifth, holding USDC 785m, 420m, 250m 235m. When banks resume work on Monday, exchanges especially Binance, may face huge demand for USDC withdrawals. @spotonchain https://t.co/B9NXH4DJqX pic.twitter.com/Fyu4ygQOHX
— Wu Blockchain (@WuBlockchain) March 12, 2023
The surge in demand for USDC withdrawals on cryptocurrency exchanges over the past few days is a clear indication of the level of panic and uncertainty currently prevailing in the market. Many traders and investors are concerned about the possible collapse of USDC and the impact it could have on the overall cryptocurrency market.
Stablecoins like USDC are designed to be less volatile than other cryptocurrencies, making them an attractive option for traders and investors looking to minimize their exposure to risk. However, recent events have made it clear that even stablecoins are not immune to market volatility.
Possibly more volatility
Despite the current state of panic, it is important to note that Circle has announced that it will fill any gap itself should it fail to recover funds from the collapsed bank. The value of USDC immediately reacted positively to this, almost restoring its link with the dollar.
However, today it is possible that the stablecoin will become volatile again. This is because the banks will reopen and withdrawals will resume.
This article was created with the help of AI. For this article, the editor-in-chief worked closely with AI to obtain the best factual information. The editor-in-chief asked specific questions and checked the answers of the AI, supplemented them for relevance and corrected inaccuracies where necessary.