USDC coin today lost its peg to the dollar amidst rumours of insolvency following the collapse of another bank - this time it's the Silicon Valley Bank, which had ties to crypto. It's the second crypto-centric bank to go bust this week and this time, the effects are significant, especially to the Circle-issued USDC coin.
At the time of writing, its value has dropped to $0.90 - all in the matter of just hours.
Whales are feeling the burn too. Justin Sun of Tron apparently took out 81 million USDC earlier today - it's not clear which currency he will exchange it to, but the value of this is already down to $75 Million - that's around $6 million loss.
Another huge loss was reported by twitter user @BowTiedPickle who posted this Twitter Thread about a DeFi user losing $2,000,000 worth of USDC as he/she tried to swap it for USDT. In the rush to convert it on the KyberSwap aggregator, the user most likely forgot to set the slippage correctly and this resulted in a total meltdown, liquidity crisis, so in the end, the user received exactly 0.05 USDT for the 2 million USDC they tried to exchange.
Ouch.
So far the rumours about USDC being insolvent are not confirmed and many speculate that Circle will be able to make it out alive, without going into a complete wipe out or collapse, but most crypto users are too afraid to take any risks. This will put even more selling pressure, possibly leading to the inevitable UST-style depeg over the coming days.
Anything is possible and after a very positive January and somewhat decent February, we are now seeing the pain returning in March. Most likely this will not be the end of it, I will of course keep you up to date with the latest news and developments in the cryptoverse. Make sure you follow ;)