Silicon Valley Bank bankruptcy makes another stable coin tank!

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USD Coin

Silicon Valley Bank went bankrupt this week, very abruptly, after a bank run followed bad news about refinancing issues of the bank.
The bank was used by a lot of tech firms, and als some crypto projects were customers of the bank.

So was Circle, the firm behind USD Coin, they had substantial deposits with the bank. Which are part of the reserves backing the stable coin USD Coin is.
Resulting in a loss of the 1 dollar peg. The value tanked to 0,89 USD, and slowly climbs back up to a current value of 0,97 USD.

infection

This is always the issue when a bank goes bankrupt, a risk of infection to other banks and companies who have reserves or outstanding loans with the bank. It can make those banks or companies switch from healthy to almost bankrupt in an instance.
Especially if the stock markets react to the news and start dumping the stock…
This kind of happened with USD Coin where a lot of USDC got dumped on the market. Resulting in a tanking of the value of USDC.

This created a virtual loss of value of 5 billion dollars of value in USDC. As there are 41 billion USDC in circulation.

It remains to be seen how the markets will react in the coming days and weeks, and when it comes clear how big the losses of Circle exactly are at Silicon Valley Bank.

Again… Interesting times!

Sincerely,

Pele23



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11 comments
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Don't you think that these successive bankruptcies of banks and cryptocurrency platforms are fabricated to strike the global economy ?

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I don’t think so, companies go bankrupt every day, that’s just capitalism at work

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But why is it that when the economy picks up for a while these negative news come to make the economy collapse again?

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The more those stable coins fall the more our HBD willbe popular.

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From what we have seen, this past week has not been good for crypto at all but the good news is that those who came down are now coming back to their original price and that is a very good. And the way we're seeing that Bitcoin has started to go back up again, so that's the way it's been going, so we'll see in the next few days we'll see 25,000 again.

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It’s funny how the markets can immediately slice the possibly lost funds from the valuation after events like this but still fully trust that the issuer had the funds to fully back each coin in the beginning.

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Yep, markets react emotionally and not rationally…

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They are trying their level best to attack crypto one way or other. They destroyed their own bank who was supporting crypto. It shows how much they are against crypto.

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it's 'old' one :) :) try to find out the Signature Bank client list. (it went down yesterday) Half size compare to SVB. I wouldn't be surprised, if it turns out plenty crypto exchanges, coin issuer had some relationship with that bank...

something's definitely started, 2 banks (correctly 3, as there were the really small Silvergate, too) in US just went down, both had massive foreign operations. (SVB around 1/3 of assets mostly in Europe and China, Signature I am just finding out.)

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