BTC/USDC Surges to $50,000 Suddenly

Key Ideas

• But only on the USDC trading pair, BTC unexpectedly crossed the $50,000 threshold.
• The stablecoin USDC from Circle is in danger of running out of liquidity, which is the explanation given for the aforementioned flash action.
• After announcing it might be able to recover $3.3 billion stuck on SVB this morning after the bank opened, Circle has been putting a lot of effort into getting USDC to the $1 level.
• With up to 30x leverage, Binance also “takes advantage of this opportunity” and launches USDC/USDT futures trading.

The price of the BTC/USDC trading pair unexpectedly rose to $50,000 on March 13 in the early morning. This was the price range of November 2021 before the entire cryptocurrency market entered the current bear season.

The reason for the aforementioned flash action is that USDC, Circle’s stablecoin, may soon run out of liquidity.

On March 11, after the owner Circle admitted to having a significant exposure to Silicon Valley Bank, the USDC value dropped below the $1 mark and underwent a significant depeg. The company is freezing up to $ 3.3 billion in cash, far exceeding the neighborhood’s estimate of $ 1 billion. This indicates that it comprises 8.25% of the $40 billion in assets that are held as reserves for USDC.

As a result of this information, the community went into a panic, and users rushed to withdraw or switch to other stablecoins. At the same time, Curve and other DeFi platforms’ USDC-rich pools have also run dry.

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Another surprise came when Binance shut down the USDC to BUSD conversion feature at that time to lessen the pressure on the exchange from conversions. Following closely behind, Coinbase also halted USDC to USD swaps. Due to the weekend, US banks are currently open for business.

With the USDC price losing its peg severely and falling as low as $0.882, many stablecoins on the market have also been impacted. This stablecoin has never experienced a depeg this severe—even worse than when LUNA-UST or FTX crashed.

However, the most recent announcement states that Circle has now resumed converting to USD at the same rate of 1 USDC to 1 USD while also reaffirming its ability to recover the trapped funds and pledging to pay the shortfall in collateral assets. As a result, stablecoin USDC has climbed back to the $1 level.

Cross River Bank has been chosen by Circle as its new partner for automatically minting and redeeming USDC for customers, which was also announced by the company. Then, Nansen, the stablecoin issuer that generated an additional 407.8 million USDC, updated the most recent data. The total net change increased to $463.8 million thanks to this week’s largest minting.

Additionally, Binance “takes advantage of this opportunity” by launching USDC/USDT futures trading with a 30x maximum leverage. Previously, with leverage up to 50x, OKX, Huobi, Bitmex, and Bybit all behaved similarly.

To increase liquidity and “rescue” Circle’s stablecoin, the exchange also added spot trading pairs for BNB/USDC, BTC/USDC, and ETH/USDC the day before.