According to a recent thread by @DeFi Ignas, a crypto analyst on Twitter, the vulnerability of USDC (USD Coin) reserves to fallen banking bodies in the US is not high enough to cause significant trouble for the 2nd biggest stablecoin. Seemingly, the worst may be behind us.
USDC Is Not Going To Zero Like TerraUSD – Ignas
While USDC has faced some challenges, it is not going to zero like TerraUSD (UST) did last May. Ignas recommends not overestimating the similarities between the two situations.
Out of the stream of assets backing USDC’s circulating supply, just about $3.3 billion is stuck in SVB — Silicon Valley Bank, which is not up to 9% of its market capitalization’s USD equivalent. This money can eventually be recovered via bank insurance processes sooner than later.
The precise damage to USDC may be under $200 million, which is quite painful but not huge. The issuer possesses enough Short-Dated Treasuries based in the U.S. to compensate for potential losses and restore balance to USDC.
While the panic in the cryptocurrency market has been amplified by Coinbase’s decision to halt Binance’s disabling of USDC/USDT swaps and USDC/USD vindications, arbitrageurs will reinstate the 1:1 fixed ratio for USDC when banks re-open by Monday.
The cryptocurrency sector faces challenges after the collapse of several cryptocurrency-friendly banks, such as Silicon Valley Bank, Silvergate, and Signature.
DeFi Ignas Makes A Bet Twitter Account Termination On The Line
Although Circle stored some USDC reserves in Silicon Valley Bank, the second-biggest stablecoin has recovered from its peg loss and is currently at $0.99. Ignas argues that it is an overstatement to juxtapose the USDC situation to the crash of the Terra ecosystem in the previous year.
Hence, Ignas promises to delete his account on Twitter, which has nearly 40,000 followers, if USDC’s price goes to zero. He has previously been proven successful in his opinions about the shutdown of the Fei stablecoin, rated game-changing altcoins in the most recent bullish rally, and shared his opinion that the upcoming Shibarium release would benefit Dogecoin.
