Problem stablecoin $USDC not going to zero, the worst has already happened, DefiIgnas says $UST $SVB
The exposure of USD Coin reserves to collapsed banking entities in USA is too low to put the second largest stablecoin in trouble, researcher says. That's why the worst may have already happened to Circle and its flagship product.In his recent thread, crypto analyst DeFi Ignas recommended not to overestimate the similarities between the problems of the USDC stablecoin and the collapse of TerraUSD in May 2022.Yes, USDC is in trouble, but it's not going to zero like UST.
Circle has already clarified how much cash they have stuck, and the situation might be better than what the market is pricing right now.He emphasized that out of the entire basket of assets that is backing USD Coin's circulating supply, only $3.3 billion are stuck in Silicon Valley Bank , which is less than 9% of its market cap's USD equivalent. But even this money can be recovered sooner or later through bank insurance procedures.
As a result, the exact damage might be below $200 million, which is painful for USDC but not that dramatic. Its issuer has enough Short-Dated U.S. Treasuries to cover the potential losses and reestablish the balance of USDC.The panic on crypto markets is amplified by the decision of Coinbase to stop USDC:USD redemptions; Binance also disabled USDC/USDT swaps. It means that when banks open on Monday, arbitrageurs will restore the 1:1 peg for USDC.
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