“Potential Crash of Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon and Solana due to Sudden Circle Depreciation Panic”
The cryptocurrency market was hit by extreme volatility following the failure of Silicon Valley Bank (SVB), which held part of stablecoin issuer Circle’s USDC cash reserves. Circle posted on Twitter that Silicon Valley Bank was one of six banking partners it uses and the company was awaiting clarity on how the Federal Deposit Insurance Corporation receivership of SVB will impact its depositors. Depositors could potentially lose out, as FIDC deposits are only insured up to $250,000. The crisis at SVB followed the $43bn USDC stablecoin’s loss of its US dollar peg earlier in the week, which wiped away $100bn from the combined crypto market. The bitcoin price had already fallen by 10% due to the failure of the crypto-friendly bank Silvergate. The collapse of SVB and Silvergate led to a rise in bitcoin transaction fees as traders attempted to secure their crypto. Circle, which has $3.3bn of the $40bn backing its stablecoin deposited at SVB, is considered to be protecting USDC from a black swan failure in the US banking system, according to Chief Strategy Officer Dante Disparte.