- Coinbase announced a temporary pause in the USDC:USD conversions over the weekend while banks are closed.
- Binance launched stablecoin spot trading pairs with fee promotions and discontinued withdrawals of USDC, USDP or TUSD in exchange for BUSD.
- Circle’s stablecoin USDC has suffered a depeg, losing its 1 US Dollar parity and dropping to $0.88 at press time.
Cryptocurrency exchanges with the largest trade volume, Binance and Coinbase have reacted to Circle’s stablecoin USDC depeg. USDC dropped from its $1 parity and hit $0.88 at press time.
Circle’s stablecoin USDC depegs
Circle’s US Dollar-pegged stablecoin USD Coin (USDC) suffered a depeg after the collapse of the Silicon Valley Bank (SVB). USDC dropped from its $1 peg and is exchanging hands at $0.88 at press time.
Find out more here: Breaking: $3.3 billion of Circle's USDC reserves stuck at Silicon Valley Bank
USDC redemption by top institutions
Several institutions like Coinbase, Jump Trading and Falconx deposited upwards of 2 billion USDC to Circle.
USDC suffers depeg
Circle’s stablecoin nosedived to $0.88, its 24-hour low. Coinbase has halted its USDC:USD conversion and asked users to wait until banks open on Monday.
The exchange explained to users that heightened market activity results in withdrawals through banks, and deposits resume during operating hours of banks on Monday.
We are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions.
— Coinbase (@coinbase) March 11, 2023
Binance adds several new stablecoin spot trading pairs
The world’s largest cryptocurrency exchange added several new stablecoin trading pairs, running fee promotions and offers for users. Binance will open trading for the BNB/TUSD, BTC/TUSD, ETH/TUSD, TUSD/USDT, USDC/USDT and USDP/USDT spot trading pairs at 2023-03-11 14:00 (UTC).
The exchange announced that BUSD auto-conversion for deposits of USDC will be halted with effect from March 10 23:30 UTC. Users will no longer be able to withdraw USDC from their BUSD balances.
Binance announcement
Any users who wish to convert their BUSD balances to USDC or USDP at a 1:1 ratio may do so manually on Binance Convert till 2023-03-18 06:00 (UTC).
Robinhood, the commission-free exchange, seems to have disabled USDC deposits according to an analyst on crypto Twitter, @HsakaTrades.
gg robinhood pic.twitter.com/GnCG6WHEtA
— Hsaka (@HsakaTrades) March 11, 2023
DAI, FRAX, TUSD, USDP: Other stablecoins suffering a depeg
Circle’s USDC is not the only stablecoin that suffered a depeg in the spreading crypto contagion. Other stablecoins, Dai (DAI), TrueUSD (TUSD), Frax (FRAX) and Pax Dollar (USDP) have depegged.
DAI, TUSD, FRAX and USDP are trading at $0.92, $0.98, $0.90 and $0.94 respectively. The depeg can be attributed to the voluntary liquidation of crypto-friendly Silvergate bank and the collapse of SVB. The bank prided itself as a lender to leading tech companies and crypto firms, therefore its downfall has affected key players in crypto: BlockFi, Pantera, Circle, Avalanche, Yuga Labs, Proof, and Nova Labs among others.
Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.https://t.co/NU82jnajjY
— Circle (@circle) March 10, 2023
Will Circle’s stablecoin suffer the same fate as UST?
The rising Fear, Uncertainty and Doubt (FUD) among crypto market participants and USDC’s depeg have raised the question whether the stablecoin will meet the same fate as Terra’s algorithmic stablecoin UST.
The algorithmic stablecoin’s collapse triggered a crypto market meltdown in 2022. It remains to be seen whether Circle will re-establish USDC’s peg and whether exchanges like Coinbase will resume conversion between USDC: USD.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.