CryptoCompare investigates how the USDC behaved after the collapse of SVB.
Despite the short-term liquidity crunch, Circle's stablecoin maintained positive fund flows.
Centralized
exchange trading volumes for the USDC/USDT stablecoin pair surged 828% to
$6.1 billion on 11 March 2023, as investors sought to switch from USDC to other tokens after the fallout of Silicon Valley Bank (SVB) in which Circle,
the stablecoin issuer, held $3.3 billion of reserves.
USDC Faced Depeg After SVB
Collapse
According
to the newest market analysis published by CryptoCompare, the collapse of SVB has lifted
the trading volume of the popular stablecoin, including decentralized
exchanges. Additionally, CryptoCompare reported an increase in USDC trading against the
US dollar.
SVB was
shut down by the California Department of Financial Protection and Innovation
on 10 March without any apparent reason for the sudden move. Reports suggest
that the bank was facing severe liquidity problems and was on the verge of
collapse. It emerged that the issuer of the USDC stablecoin, Circle, holds $3.3
billion (8%) of the funds backing the USDC in SVB.
The event
triggered a market panic, leading investors to sell off their USDC tokens and
switch to other commonly used stablecoins or the US dollar. Consequently, the
stablecoin's value disconnected from its fixed exchange rate with the USD. At
its lowest point, USDC traded for only 88 cents during the Saturday session.
However, the situation stabilized on Monday, and the exchange rate has now
reached $0.9994.
A study
by CoinGecko showed that USDC supply dropped 9% amid the SVB crisis, while TUSD and
DAI stablecoins gained the most traction. Their market supply rose by 57.4% and
27.4%, accordingly. DAI saw the most significant gain in interest with an
increase of 1.35 billion in absolute terms. At the same time, USDT, TUSD, and FRAX followed
with supply growth of 0.94 billion, 0.73 billion, and 0.69 billion,
respectively.
High USDC Volatility and a Visible
Jump in Trading Volumes
"On 11
March, USDC-USDT centralized exchange trading volumes soared 828% to $6.1bn, as
market participants looked to flee USDC and migrate to a 'safer' stablecoin.
Moreover, the USDC-USD trading pair saw a substantial increase in trading volume
during this time," CryptoCompare commented in its report.
There was a
significant increase in decentralized exchange (DEX) volumes as well, from
$7.14 billion on 10 March to $25.0 billion on 11 March, indicating a 249%
surge. Alongside this, Ethereum gas fees observed a new high in 2023, reaching
101 Gwei, as there was an uptick in blockchain network activity.
Despite the
temporary collapse of the market and its liquidity, there were no negative USDC
outflows from traditional cryptocurrency exchanges. Ultimately, the overall fund
flows turned positive for Circle's stablecoin.
"We
attribute this to some traders trying to make arbitrage profit from the USDC
peg as seen when analyzing trades using CryptoCompare trade data,"
CryptoCompare explained.
CryptoCompare's
analysis concludes that recent events have shown that crypto is still heavily
dependent on traditional finance, exposing the fragility of centralized
stablecoins. Circle has proven to effectively manage its collateral reserves,
which is essential for long-term confidence in its ability to navigate
potential issues with traditional banking.
However, the
collapse of SVB highlights the impact of the Federal Reserve's (Fed) interest
rate hikes on the financial system, which has caused a Fed-induced crisis due
to "inaccurate interest rate forecasts" and "the fastest
interest rate hikes" in US monetary history.
Centralized
exchange trading volumes for the USDC/USDT stablecoin pair surged 828% to
$6.1 billion on 11 March 2023, as investors sought to switch from USDC to other tokens after the fallout of Silicon Valley Bank (SVB) in which Circle,
the stablecoin issuer, held $3.3 billion of reserves.
USDC Faced Depeg After SVB
Collapse
According
to the newest market analysis published by CryptoCompare, the collapse of SVB has lifted
the trading volume of the popular stablecoin, including decentralized
exchanges. Additionally, CryptoCompare reported an increase in USDC trading against the
US dollar.
SVB was
shut down by the California Department of Financial Protection and Innovation
on 10 March without any apparent reason for the sudden move. Reports suggest
that the bank was facing severe liquidity problems and was on the verge of
collapse. It emerged that the issuer of the USDC stablecoin, Circle, holds $3.3
billion (8%) of the funds backing the USDC in SVB.
The event
triggered a market panic, leading investors to sell off their USDC tokens and
switch to other commonly used stablecoins or the US dollar. Consequently, the
stablecoin's value disconnected from its fixed exchange rate with the USD. At
its lowest point, USDC traded for only 88 cents during the Saturday session.
However, the situation stabilized on Monday, and the exchange rate has now
reached $0.9994.
A study
by CoinGecko showed that USDC supply dropped 9% amid the SVB crisis, while TUSD and
DAI stablecoins gained the most traction. Their market supply rose by 57.4% and
27.4%, accordingly. DAI saw the most significant gain in interest with an
increase of 1.35 billion in absolute terms. At the same time, USDT, TUSD, and FRAX followed
with supply growth of 0.94 billion, 0.73 billion, and 0.69 billion,
respectively.
High USDC Volatility and a Visible
Jump in Trading Volumes
"On 11
March, USDC-USDT centralized exchange trading volumes soared 828% to $6.1bn, as
market participants looked to flee USDC and migrate to a 'safer' stablecoin.
Moreover, the USDC-USD trading pair saw a substantial increase in trading volume
during this time," CryptoCompare commented in its report.
There was a
significant increase in decentralized exchange (DEX) volumes as well, from
$7.14 billion on 10 March to $25.0 billion on 11 March, indicating a 249%
surge. Alongside this, Ethereum gas fees observed a new high in 2023, reaching
101 Gwei, as there was an uptick in blockchain network activity.
Despite the
temporary collapse of the market and its liquidity, there were no negative USDC
outflows from traditional cryptocurrency exchanges. Ultimately, the overall fund
flows turned positive for Circle's stablecoin.
"We
attribute this to some traders trying to make arbitrage profit from the USDC
peg as seen when analyzing trades using CryptoCompare trade data,"
CryptoCompare explained.
CryptoCompare's
analysis concludes that recent events have shown that crypto is still heavily
dependent on traditional finance, exposing the fragility of centralized
stablecoins. Circle has proven to effectively manage its collateral reserves,
which is essential for long-term confidence in its ability to navigate
potential issues with traditional banking.
However, the
collapse of SVB highlights the impact of the Federal Reserve's (Fed) interest
rate hikes on the financial system, which has caused a Fed-induced crisis due
to "inaccurate interest rate forecasts" and "the fastest
interest rate hikes" in US monetary history.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
Consensys Sues the SEC: Calls Its Authority over Ethereum “Unlawful”
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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