USDC in Panic but not Returning to Zero

03/11/2023 10:33 • Tech Ticker • 141 views

On March 11, DeFi researcher Ignas said in a message that USDC seemed to be in a state of panic but would not return to zero as UST did. Circle had clarified the amount of cash it held. Now only 8.2% (US $3.3 billion of US $40 billion) were trapped in Silicon Valley banks, but that did not mean that the money was gone. If the expected expenditure of the Federal Deposit Insurance Corporation of the United States was 94%, The loss of Circle may only be $198 million (the entity can immediately obtain 62% of the balance payment and recover 94% of the funds through the final payment under the “prepayment dividend” process of the Federal Deposit Insurance Corporation of the United States).

Viewpoint: USDC will not return to zero like UST, and Circle’s loss may only be 198 million dollars

Analysis based on this information:

The message highlights the recent concerns surrounding USDC, a stablecoin that is pegged to the US dollar. According to Ignas, a DeFi researcher, USDC appeared to be in a state of panic, which could be attributed to Circle’s recent disclosure of its cash holdings. In particular, Circle clarified that only 8.2% of its $40 billion were stuck in Silicon Valley banks, suggesting that the money was not lost entirely.

However, the message clarifies that USDC is not expected to drop to zero value, unlike UST, another stablecoin. The author believes that Circle’s potential loss may only be $198 million, assuming the Federal Deposit Insurance Corporation’s expected expenditure of 94%. The corporation’s prepayment dividend process can also help Circle recover 94% of the funds it lost, providing some relief.

The message suggests that although the panic around USDC is understandable, the stablecoin is still relatively stable compared to other cryptocurrencies. Its peg to the US dollar provides some level of certainty, as long as Circle has the required cash holdings to support the stablecoin. The author’s interpretation also highlights the importance of transparency in the cryptocurrency market. Circle’s disclosure of its cash holdings helped ease some of the panic around USDC, demonstrating the need for more transparency in the industry.

In conclusion, the message conveys a nuanced interpretation of the recent concerns surrounding USDC. While the stablecoin may be experiencing some level of panic, it is not expected to drop to zero like some other cryptocurrencies. Circle’s disclosure of its cash holdings also provides some relief, giving investors and users greater confidence in the stablecoin. The key takeaway from the message is that transparency is critical for the cryptocurrency industry to gain trust and legitimacy.

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USDC in Panic but not Returning to Zero

Viewpoint: USDC will not return to zero like UST, and Circle’s loss may only be 198 million dollars

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