USDC is the so-called stablecoin, which is a cryptocurrency that will maintain the same price of one dollar. Stablecoins have been used, among other things, by cryptocurrency traders as a safe place to put their money, for example, if they anticipate a drop in cryptocurrency prices.
However, the stablecoins took a big hit when the value of the stablecoin TerraUSD suddenly fell, an unexpected drop that, among other things, took the LUNA cryptocurrency with it, and led to a sharp drop in value in the crypto market.
USDC is now falling below the dollar, and at 15:00 on Saturday, the cryptocurrency was trading for $0.91 – a decline of 8.8 percent. This could be bad news for the cryptocurrency market, which plunged last week after cryptocurrency-friendly specialist bank Silvergate was forced into voluntary liquidation.
Raised by the bank affected by the crisis
The price drop can be largely linked to the collapse of venture capitalist Silicon Valley Bank, which collapsed on the stock exchange after reporting a $1.8 billion loss. The bank has invested large sums in risky startups with a lot of debt, and large portions of the losses can be linked to the sharp rise in interest rates over the past year.
USDC should initially be worth exactly the same as a dollar, and the cryptocurrency is backed by nearly $40 billion in reserves. But the problem is that $3.3 billion of that amount, according to Bloomberg, is with the Silicon Valley bank.
The collapse of the Silicon Valley bank sparked concerns in the banking sector, as a number of major banks fell by a significant percentage on Friday, both in the United States and Europe. Many fear the exposure of most banks to venture capital and venture capital investments, which are suffering badly from high interest rates.
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