Bitcoin and ether experienced a 4% increase in value over the past 24 hours, recovering from a steep decline on Friday that was caused by the contagion risks of Silicon Valley Bank's collapse spreading to the crypto market. This was due to the exposure of Circle, the issuer of USD Coin, to the bank. On Saturday, ether rose above $1,450 and bitcoin surpassed the $20,000 mark, indicating early signs of market stabilization, despite both tokens falling below strong resistance levels on Friday. However, other cryptocurrencies such as matic, BNB Coin, and XRP did not experience similar gains, suggesting that traders were still avoiding risks with lesser-known tokens. Matic rose 1.6%, while BNB Coin and XRP both saw nominal increases of 2% during the Asian evening hours on Saturday.
On Friday, regulators shut down Silicon Valley Bank, which caused a sudden and significant market movement. Traders sold their token holdings in a panic, and the value of USDC fell as low as 87 cents early Saturday, leading to a sell-off. As a result, the total crypto market capitalization fell below $920 billion for the first time since November, and more than $200 million worth of crypto-tracked futures were liquidated in the past 24 hours, with nearly $60 million in bitcoin futures and $40 million in ether futures being liquidated. This likely contributed to the decline in bitcoin and ether prices.
Liquidation occurs when a trader lacks sufficient funds to keep a leveraged trade open. However, some market analysts dismissed concerns about USDC, citing the token's backing by the US Treasury. They pointed out that 80% of the token's assets are in the form of 6 million US T-bills, with 85% of these bills having been rolled over in the past three months, which implies negative interest rate risk. Adam Cochran, a partner at crypto fund CEHV, also suggested that fears about the longevity of USDC were overstated, as the FDIC-insured nature of SVB implied a low likelihood of major losses. Elsewhere, Hal Press, the co-founder of North Rock Digital, tweeted that 77% of Circle's reserves were held in US Treasury bills, meaning that the theoretical floor price of USDC was 77 cents.