Hi HODLers,
The dominoes are still moving and there might be other organisations that end up falling.
Once deemed the most reliable stablecoin: USDC is under the spotlight as U.S.-based stablecoin issuer Circle held a part of its USDC stablecoin’s cash reserves at Silicon Valley Bank.
This can be seen in the firm's latest attestation (as of Jan. 17, 2023).
USDC is the 2nd argest stablecoin on the market, with a $43 billion circulating. It is backed by cash deposits and US-Bonds.
Full list of Banks where Circle held deposits
- Bank of New York Mellon, Citizens Trust Bank,
- Customers Bank,
- New York Community Bank (a division of Flagstar Bank, N.A.),
- Signature Bank,
- Silicon Valley Bank and
- Silvergate Bank
Circle also keeps some part of USDC reserves in a dedicated BlackRock fund.
The two last ones are now in the process of being liquidated. Signature Bank is also under strong pressures as it is a regional bank linked to tech and the Bay Area.
I have seen a lot of speculation around the amount of assets that Circle had in SVB (from $3bn to $7bn) but these are just speculations and probably FOMO. Nevertheless, a sizeable amount of their capital must be in these 2 now failed banks. This is worrysome for USDC possibility to be redeemed.
How things move fast in crypto... A few weeks ago, $USDT was the least trustworthy and now it seems they might be the safest.
USDC Price Chart
I am not going to lie, I have taken advantage of this situation to short USDC as the risk-reward is clearly positive. I added short positions up to $0.992 and I have been deleeraging around $0.987.
USDC might need a haircut for a while before this is figuring out and worst case scenario, it goes back to the PEG.