USDC Stablecoins worth $1.7 billion was withdrawn from circulation in one day on March 13
USD Coin Stablecoins worth $1.7 billion was withdrawn from circulation in one day on March 13
Cryptocurrency market participants got rid of more than 2% of the token's circulating supply after the Silicon Valley Bank collapse and are in no hurry to invest in it again, Nansen analysts report
USD Coin Stablecoins (USDC) worth about $1.74 billion were withdrawn from circulation in a single day on March 13.
On March 11, USDC Stablecoin lost its peg to the U.S. dollar and fell to $0.87 after news of the closure of Silicon Valley Bank (SVB). The bank locked up $3.3 billion of Circle's USDC funds. That's about 8% of the total asset's nearly $40 billion in collateral.
Circle, the issuer of the USDC, announced on the morning of March 13 that the risk of losing the blocked assets at SVB had been removed and would be available on March 13 with the start of the U.S. business day. Amid this news and the government's announcement of refunds to all depositors, USDC regained its peg to the dollar and rose to $0.98-$0.99.
Nevertheless, according to Nansen analysts, many traders decided to cash out at the first opportunity, even despite the rise in prices of most cryptocurrencies on March 13. Market participants redeemed more than 2% of USDC's negotiable supply on the day.
"There's also the panic factor." How the SVB bank collapse affected the crypto market
"We haven't seen such a drawdown in the supply of Stablecoin since the regulator banned BUSD last month," said Andrew Thurman, head of content at Nansen.
In February, the New York State Department of Financial Services (NYDFS) ordered Paxos Trust to stop issuing new Binance USD (BUSD) tokens. The regulator cited the reason for the ban as the fact that Paxos cannot "safely and securely" issue the stablecoin.
According to Nansen, the number of USDCs held by institutional and professional traders are at several months' lows, indicating that these investors are either redeeming them or doing nothing, watching the situation.
"Institutional investors are still holding huge amounts of USDC, but it looks like those who got rid of them are hesitant to go back in," Thurman said.
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