Bitcoin and ether rallied 4% over the past 24-hours after Friday’s massive decline, as risks spreading from the collapse of the Silicon Valley bank spread to crypto markets, particularly the USD coin-issuer circle’s risk to the bank.
Ether (ETH) climbed above $1,450, while bitcoin (BTC) jumped above the $20,000 mark on Saturday to post early signs of stabilization in the market. On Friday, both the coins declined below strong resistance levels.
Other cryptocurrencies did not post similar gains, however, suggesting that traders are yet to take a risk on the lesser-known coin. Polygon’s Matic (MATIC) was up 1.6% while BNB Coin (BNB) and XRP were up a modest 2% each in the Asian evening hours on Saturday.
There was a sudden and rapid market stir on Friday as regulators shut down SVB amid a run on the bank. Traders panicked as USDC fell to 87 cents early Saturday, triggering a sell-off.
Total crypto market capitalization fell below $920 billion for the first time since November, while over $200 million worth of crypto-tracked futures were liquidated in the past 24 hours.
Nearly $60 million in bitcoin futures were liquidated, the most among the major cryptocurrencies, followed by $40 million in ether futures liquidations. Such liquidators may have contributed to the decline in bitcoin and ether.
Liquidation occurs when a trader has insufficient funds to keep a leveraged trade open.
Meanwhile, some market analysts have dismissed long-term USDC fears, pointing to US Treasury backing for the token.
“80% of his wealth is in the form of 6 million US T-bills,” wrote a Members of the crypto Twitter community. “85% of these bills have been rolled over in the last 3 months. Interest rate risk is negative.
Adam Cochrane, partner at crypto fund CEHV, said that the FIDC-insured nature of SVB suggested that fears about USDC’s longevity were overblown.
“Good comparable to the FDIC recovery process – the entity received 62% of the balance paid immediately under the FDIC “advanced dividend” process, and 94% was recovered from the final payment,” Cochran said. “If same on SIVB then Circle’s max loss is $198M on $3.3B.”
Elsewhere, Hal Press, co-founder of North Rock Digital Tweeted 77% of Circle’s reserves were held in US Treasury Bills – citing official document – This means that the theoretical minimum value of USDC was 77 cents.
“Circles have 77% of their reserves in T-Bills of 1-4 months. These T-bills are held at BNY Mellon and managed by BlackRock. This provides an absolute floor at USDC of 0.77,” said the press.