USDC Plunges Following Silicon Valley Bankruptcy
The Wall Street Journal reported that USDC plummeted after Circle, the company that manages the currency, announced it was holding $3.3 billion in bankrupt Silicon Valley.
Frightened investors dumped more than $2 billion in US dollars, according to the paper.
As of Saturday morning, USDC fell below 87 cents.
The authors of the article warned that the violation of the currency peg to the dollar “could cause a shock in the world of cryptocurrencies.”
They noted that the decline in the value of USD Coin “reminds us of the worst moments of the 2008 financial crisis.”
USDC is one of the main digital currencies in the cryptocurrency markets. It is supposed to have a fixed cost of $1. It is fully backed by cash reserves and short-term treasury bonds.
The closure of SVB, short for Silicon Valley Bank, marks not only the largest bankruptcy since Washington Mutual closed in 2008, but also the second-largest retail bank failure in the United States.
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