Bitcoin (BTC) refused to let the $20,000 support on March 11 drop in favor as the weekend opened to a battle for lost ground.
Bitcoin shakes USDC depeg
Data from Cointelegraph Markets Pro and Trade show BTC/USD showed around $20,200 at the time of writing.
A brief dip below $20,000 overnight was short-lived, and sentiment appeared more stable as initial panic over the stability of the United States Bank subsided.
The collapse of Silicon Valley Bank (SVP), which dealt a fresh blow to some crypto firms following Silvergate, continued to play out.
At the center of the debacle was payment technology company Circle, which overnight disclosed part of its stablecoin USD Coin (USDC) reserve fund with SVB.
The USDC immediately began to slide from its US dollar peg and only recovered to $0.91 at the time of writing. At one point, Bitcoin was worth over $26,000 in USDC terms on the major exchange Kraken.
“If USDC is only 90% backed, the equilibrium price is not $0.90. The equilibrium price is ZERO”, Corey Clipston, Swan Bitcoin CEO, reactedAdd:
“Every $1 has an incentive to redeem quickly. You don’t want to be in the last 10% because all the money is already gone.
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market cap, would not fail outright.
A TweetThe circle said it has five other bank partners to manage its USDC cash reserves.
Financial ratios reflect FTX sentiment
Beyond the USDC, nerves were predictably high among traders.
Related: Circle’s USDC Instability Has Domino Effect on DAI, USDD Stablecoins
Average fund rates They were the most negative since FTX in November 2022, and indicate a strong belief that losses could still affect Bitcoin.
However, analyzing the implications, commentator tedalxmacro argued that higher bearish bias could fuel a classic “short squeeze” higher in BTC/USD.
“The market is very short here, still. And this could fuel a short-term test of at least 21.4k for BTC,” read part of a tweet. According to.
Tedtalksmacro said Bitcoin’s multiweek decline below the $20,000 mark is already “well underway.”
Other popular market participants favored a pullback in the short term.
“In today’s madness, Bitcoin is holding up well. I expect another drop to the $19,200 interim support zone,” Crypto Tony said followers.
The views, opinions and opinions expressed herein are those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.