Mar 11, 2023
USDC Depegging Triggers Stablecoin Ecosystem Sell-Off
The cryptocurrency space experienced a major shakeup recently when USDC, a stablecoin issued by Circle, depegged from the US dollar following a sell-off. This caused a ripple effect across the stablecoin ecosystem, leading to a significant drop in the value of Dai, USD Digital, and Frax.
Data from Statista shows that as of June 2022, $6.78 billion worth of Dai was collateralized by $8.52 billion worth of cryptocurrencies. USDC accounted for the majority of this collateral, representing 51.87%, or $4.42 billion. Ether and Pax Dollar followed with $0.66 billion and $0.61 billion respectively.
The depegging of USDC caused an immediate drop in the value of Dai, resulting in a 7.4% decrease. This brought the value of Dai down to $0.897, although it has since recovered to the $0.92 mark. USD Digital and Frax also experienced a 7.5% and 8.5% decrease in value respectively.
The cause of USDC’s depegging was due to Silicon Valley Bank (SVB) not processing a $3.3 billion transfer request from Circle. SVB was then ordered to shut down by the California Department of Financial Protection and Innovation, but the Federal Deposit Insurance Corporation was appointed as the receiver to protect insured deposits.
Tether and Binance USD, two other popular cryptocurrencies, have managed to hold their 1:1 peg with the US dollar despite the recent market turmoil.
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Overall, the depegging of USDC has had a significant impact on the stablecoin ecosystem, and the effects of this event are still being felt by many. It remains to be seen how the market will respond in the coming days and weeks.Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.