Phew! That Was Close!
Well, last week’s SVB bank failure and subsequent de-peg of crypto’s second largest stablecoin, USDC, had everyone scared. Luckily, before the market could open on Monday, U.S. Treasury Secretary Janet Yellen and U.S. prudential regulators announced that all depositors with Silicon Valley Bank will be made whole.
That also included a $3.3B USDC reserve deposit held at Silicon Valley Bank, about 8% of the USDC total reserve. Nonetheless, the last weekend had everyone terror-stricken, from the startup world to the crypto world.
It all started when Silicon Valley Bank (SVB), the 16th largest U.S. bank with $212B in assets, with a primary focus on the startup industry, collapsed within a period of 48 hours, putting the entire startup/tech industry at risk.
The failure of SVB not only put the entire startup ecosystem at risk but also crypto’s darling - the second largest stablecoin, USDC. Circle, the company responsible for issuing and redeeming US-dollar backed stablecoin USDC, had approx. $3.3B USDC reserve deposit held at Silicon Valley Bank, about 8% of the USDC total reserve.
Suddenly, with the failure of SVB, hence the loss of deposit (stablecoin’s backing), the crypto market reacted with panic, which led to the de-peg of the stablecoin. From a simplistic assumption, the market reacted by thinking $3.3B out of $40B (total supply of USDC) is completely lost, hence 8% exposure; therefore, USDC should be worth $0.92.
Lo and behold, the USDC was soon trading at $0.92. Then came another set of traders and crypto Twitter threaders joining hands to let people know that $3.3B exposure to SVB is not lost in its entirety; therefore, USDC is worth more than $0.92 but still less than $1.
And soon enough, we saw USDC trading at a price range of $0.95 to $0.98. Well, before our CT threaders and bank-run expert come up with more ideas to price the stablecoin correctly, Circle announced that its deposit held at SVB would be fully available when U.S. banks open on Monday. And they were.
And kids, that’s how we spent that dark weekend of March’23.
Tweet of the week:
Web3 tool of the week:
This week’s web3 tool of the week is – Asset.Money!
Asset.Money can be said to be your home of NFTs. It makes it easy to discover, invest, and manage all your NFTs in one place to supercharge your NFT adventure.
This platform not only lets you sync and track your NFT portfolio in a single dashboard but also allows you to set alerts and updates. It simply watches over your wallet and sends you time, price, and percentage change alerts for your portfolio to your email & telegram.
What I like most is – Find Estimate Value. Asset.Money’s unique feature lets you find the true value of your NFT collection. So even though everything is down in this bear market, Asset.Money gives you hope to hold on and not underestimate the value of your NFT collection.
Notable news of the week:
- Meta is building a decentralized, text-based social network
- EU Parliament passes smart contract regulation under Data Act
- Instagram is sunsetting digital collectibles (NFTs). Features will be disabled across the platform.