Bitcoin rises 20 percent as stablecoin USDC nearly regains dollar peg after US government takes emergency action to rescue SVB depositors
Bitcoin surged in value on Monday following the US government’s emergency measures to protect depositors at failed crypto lenders Silicon Valley Bank (SVB) and Signature Bank (SI).
As of early Tuesday the biggest cryptocurrency had risen some 20 percent to nearly $25,000 (£20,566) over its lows of Friday, the day that SVB was shuttered by regulators.
On Sunday the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation said depositors at the bank, as well as those of Signature, which failed on Sunday, would have full access to their funds on Monday.
Meanwhile USD Coin (USDC) the second-biggest so-called stablecoin, was near to regaining its one-to-one peg with the US dollar on Tuesday.
The company that issues USDC, Circle Internet Financial, said last week it held $3.3bn at SVB, or about 8 percent of the reserves that are supposed to back the stablecoin.
The news caused USDC to lose its peg to the US dollar and drop to as low as 85 cents on Saturday.
But as of early Tuesday it was trading at about 99 cents after Circle said the SVB funds would be “fully available”.
Circle said in total it holds about $9.7bn in cash, $5.4bn of which is now held with BNY Mellon.
Crypto traders redeemed nearly $1.74bn of the USDC coin on Monday, or about 2 percent of USDC’s circulating supply, according to data from research firm Nansen.
The Binance and Coinbase Global exchanges had temporarily halted certain conversions of the stablecoin, which is used to facilitate trading.