Crypto Market Anticipates Major Impact from Federal Announcement Following Silicon Valley Bank Crisis Resulting in Turmoil of Bitcoin, Ethereum, and USDC Prices
The cryptocurrency market is set for volatility as Circle’s USDC stablecoin loses its U.S. dollar peg, following a week of turmoil that resulted in the collapse of the crypto-friendly bank Silvergate, wiping $100 billion from the combined crypto market. The crisis at startup lender Silicon Valley Bank (SVB), where Circle held a part of its USDC cash reserves, is now threatening to wipe out the second-largest stablecoin by market capitalization. Circle has $3.3 billion of the $40 billion backing its stablecoin deposited at SVB, with deposits of up to $250,000 guaranteed by the Federal Deposit Insurance Corporation (FDIC), potentially leaving Circle and other depositors out of pocket. Major U.S. crypto exchange Coinbase has suspended U.S. dollar USDC conversions, while Goldman Sachs analysts no longer expect the Federal Reserve to hike interest rates later this month, likely due to the recent banking system stress. The bitcoin price has already suffered a major crash this week, causing Top 10 cryptocurrencies ethereum, BNB, XRP, cardano, polygon, dogecoin, and solana to plunge. The bitcoin price rebounded after the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) announced that all Silicon Valley Bank deposits would be protected after the bank failed.