Bitcoin (BTC) refused to let the $20,000 support die for good on March 11 as the weekend opened up to a battle over lost ground.
Bitcoin shakes off USDC depeg
Data from Cointelegraph Markets Pro and TradingView it showed BTC/USD circulating $20,200 at the time of writing.
A brief dip below the $20,000 mark overnight was short-lived, and the mood looked steadier on the day as the initial wave of panic over US banking stability subsided.
However, the collapse of SVB Financial, which followed Silvergate and dealt a new blow to some cryptocurrency companies, continued to occur.
At the center of the debacle this time was Circle, the Blockchain firm that revealed overnight that it had lost part of the reserve funds of its stablecoin, USD Coin (USDC) with SVB.
USDC immediately began to slide from its peg to the US dollar and, at the time of writing, was redeemable for just $0.91, while at one point making Bitcoin worth over $26,000 in USDC terms. on the main Kraken exchange.
“If USDC is only 90% backed, the equilibrium price is NOT $0.90. The equilibrium price is ZERO,” Cory Klippsten, CEO of Swan Bitcoin, reacted.
“Everyone has the incentive to redeem ASAP for $1. You don’t want to be in the bottom 10%, with all the money already spent.”
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market capitalization, would not fail completely.
2/ The worst is over
We now know that 8.2% ($3.3bn of $40bn) is currently stuck in SVB, but that doesn’t mean the money is gone.
As Adam pointed out, in a similar FDIC recovery process, we can expect a 94% payout.
So the damage could be around $198 million dollars. https://t.co/xvshlKuCmZ
— Ignatius | DeFi Research (@DefiIgnas) March 11, 2023
in a cheepCircle itself said it had five other banking partners to manage its USDC cash reserves.
Funding rates mimic the FTX mood
Beyond the USDC, unsurprisingly, jitters among traders remained.
Related: Circle’s USDC Instability Causes Ripple Effect on DAI and USDD Stablecoins
Average financing rates they were more negative since the FTX aftermath in November 2022, indicating a strong belief that more losses could still be in for Bitcoin.
However, when analyzing the implications, commentator Tedtalksmacro argued that an overwhelming bearish bias could provide fuel for a classic bullish “short squeeze” on BTC/USD.
“The market is still very short here, yet. And that could provide fuel for BTC to test at least 21.4k near term,” part of a tweet. read.
Tedtalksmacro added that a squeeze was already underway based on Bitcoin’s rebound from multi-week lows below the $20,000 mark.
Other popular market participants favored a return to the downside in the near term.
“Amid the madness today, Bitcoin is still good. I anticipate another decline to the interim support zone around $19,200”, Crypto Tony said followers.
The views, thoughts, and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
