The sudden collapse of Silicon Valley Bank, the 16th-largest commercial bank in the US with more than $200 billion in assets, garnered the greatest attention in the past 24 hours on the US stock market and in the cryptocurrency sector. This was characterised as the most comprehensive banking calamity since 2008, with $209 billion in losses.
Because there is a chance that the aforementioned incident will have an influence on other central banks as well as people and businesses who deposit money at Silicon Valley Bank, the impact of the event has not yet been fully quantified.
US officials are quite concerned about the possibility of cryptocurrency corporations keeping their money in this country, particularly in the crypto market. The US Silicon Valley region is home to Silicon Valley Bank, a company that specialises in offering services to investment funds and entrepreneurs in the technology sector. Slivergate Bank, a cryptocurrency-friendly bank, saw a similar negative impact after the empire-sized FTX fell apart in late 2022.
However, the market descended into chaos when stablecoin issuer Circle, which controls USDC, the second-largest stablecoin in terms of market value, revealed that it had kept a Cash escrow at Silicon Valley Bank. They stated that six institutions, including Silicon Valley Bank, owned about $2.7 billion, or the 25% number, which they had previously stated. It has been verified by Circle that Silicon Valley Bank will hold $3.3 billion in USDC collateral. 7.6% of USDC’s $43.4 billion capitalisation is represented by this. This amount is significantly higher than the projected $1 billion. The estimated 40% loss suggests that Circle might lose up to $1.2 billion.
Due to the aforementioned bad news, the USDC price depegged and dropped below the $1 level, reaching $0.997. Since July 2020, the USDC has had a depreciation that is deeper than crises like the LUNA-UST or FTX.