USD Coin (USDC) lost its $1 peg to the USD, trading as low as 81.5 cents on March 11. Meanwhile, trackers indicate that Circle, the issuer of USDC, has burned through $2.34 billion in the past day to meet growing redemption requests.
$2.34b in USDC already burned
Circle’s USDC, the second largest stablecoin by market capitalization, has tanked due to the failure of Silicon Valley Bank (SVB). The Circle company has since disclosed that $3.3 billion of its $40 billion reserves were still locked up in the bank. Thus, it caused a lot of Fear, Uncertainty, and Doubt (FUD) in its reserve status.
According to Nansen data, Circle burned through $2.34 billion worth of USDC in the last 24 hours as investors scrambled to recoup their assets when the stablecoin lost its peg. Notably, around 70%, or $1.65 billion worth of USDC, burned up in the last eight hours.
Circle’s transparency report shows that SVB was one of six banking partners that had some of their cash reserves backing the USDC stablecoin. The amount was about 7.5% of the total reserves, which also included the Circle Reserve Fund’s portfolio that included short-term US Treasuries.
Circle initiated a wire transfer to withdraw its funds from SVB on March 9 when it was announced that the bank would close its operations. However, come March 11; Circle confirmed that the wire transfers did not go through in full and that $3.3 billion of USDC reserves were still in the bank.
USDC price goes down
After Circle made the announcement, the stablecoin immediately slid.
It is currently trading at $0.91, a drop of 8.92% in the last day. At spot rates, it is trending in the range of May 2019 when the stablecoin hit a record low of $0.89.
Meanwhile, the token’s trading volume has increased by 380% to $22 billion.
USD Currency – 1 week | Fountain: coinmarketcap
On the other hand, major exchanges have stopped USDC conversions. Coinbase announced that it has stopped USDC – USD conversions over the weekend and will resume on Monday.
Binance also paused USDC – BUSD conversions citing “current market conditions.”
Adam Cochran, on Twitter, wrote that things are stabilizing as USDC moves towards its dollar peg and similarly, FUD is likely to turn lower.
