The crypto market was rocked earlier last month due to the USDC reserves being depegged and the subsequent fear-induced selloff. As the fears subsided and the markets returned to their bullish trajectories, it is noticable that USDC lost some of its power in the market. This is seen in official data which shows that in the past 7 days, Circle issued a total of $600 million in USDC and redeemed $2.5 billion in USDC, leading to a circulation decrease of $1.9 billion. Despite this, USDC is still trading at the “stable” $1 peg, and speculation is beginning to arise as to why the currency is not able to maintain itself.

It appears that the United States banks, along with the Credit Suisse crisis, have had a marked impact on the stablecoin which is released by Circle. Even though other smaller-circulation currencies such as PAXOS BUSD and Dai from MakerDAO lost their pegs, USDT still gained from the instability with it momentarily surpassing $1. This is in line with investors exiting the depegged stablecoins as a form of protection.

The total circulation of USDC is currently at $32.6 billion and the reserve stands at $32.8 billion, including $4.4 billion in cash and $28.4 billion in short-term US treasury bonds. Despite this, there is evidence of the DeFi market not losing its grip, as Uniswap saw roughly $13.3 billion in Volume on March 11, while Coinbase had $1.7 billion.

This has led to interest in investigating potential solutions to the issues with cryptocurrency, with some believing that better measures need to be taken to ensure that it remains stable. It is unclear what steps need to be taken, but it appears that currency holders may have to take more responsibility for their investments in the future if they are to reap the full rewards of their digital assets.



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