3 Comments
Mar 11, 2023Liked by Peter Nayland Kust

The fact that it predictably influenced BtC value tells us of the fickle nature of some or most crypto holders.

Good time to buy the dip imho.

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The fluctuation in USDC is inevitable, given the nature of stablecoins.

In order to maintain a dollar peg, one has to have a sufficient reserve of US dollars. One reason China for years was a major purchaser of US Treasuries is that Beijing used those holdings to keep the off-shore yuan within a certain trading range of the US dollar (and today they still use other mechanisms to achieve largely the same result).

When Circle was suddenly cut off from $3.3B of its dollar reserves, the effect would be just the same as if Beijing were suddenly cut off from a large portion of its US Treasuries portfolio.

While the ultimate outcome for the USDC stablecoin won't be known until next week, this is not the same situation as the collapse of the UST stablecoin and its companion crypto Luna last spring. UST was an algorithmic stablecoin, while USDC is a fiat-collateralized stablecoin.

In theory, if Circle can recover most if not all of its cash from the SVB collapse, it ought to be able to restore the 1:1 peg to the dollar. Whether Circle can restore the peg without that cash remains to be seen.

Whether Circle will be given the time by the crypto marketplace to recover the cash, assuming the cash is recoverable, also remains to be seen.

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Mar 11, 2023Liked by Peter Nayland Kust

I guess see my comment on your post just prior.

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