Bitcoin (BTC) refused to let $20,000 support die definitively on March 11 as it began the weekend in a battle for losing ground.
Bitcoin scrap cancel USDC
Data from Cointelegraph Markets Pro and TradingView BTC/USD is showing around $20,200 at the time of writing.
A brief drop below $20,000 overnight was short-lived, and the mood seemed more stable as the initial panic over the stability of US banks subsided.
However, the collapse of the Silicon Valley Bank (SVB), which followed Silvergate dealt a new blow to some crypto companies, continued to unfold.
At the center of the debacle was payments technology company Circle, which revealed overnight that it had a portion of the reserve funds for its stablecoin, USD Coin (USDC), with SVB.
USDC immediately began slipping from its currency peg to the US dollar and was redeemable at the time of writing for just $0.91. At one point, Bitcoin was worth over $26,000 in USDC terms on the main Kraken exchange.
“If USDC is only backed by 90%, then the equilibrium price is not $0.90. And the equilibrium price is zero,” said Corey Clepsten, CEO of Swan Bitcoin, reaction.
“Everyone has the incentive to redeem as quickly as possible for $1. You don’t want to be in the last 10%, with all the money already gone.”
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market capitalization, would not fail completely.
in tweetCircle itself said it has five other banking partners to manage its USDC cash reserves.
Funding rates mimic the mood of FTX
Away from USDC, nerves among traders remained as expected.
Related: Circle’s USDC instability is causing a domino effect on DAI and USDD stablecoins
middle funding rates It was at its highest negative level since the aftermath of FTX in November 2022, which indicates a strong belief that more losses could still be implicated in Bitcoin.
Analyzing the implications, however, commentator Tedlaxmacro argued that a massive bearish bias could provide fuel for a classic “short squeeze” on BTC/USD.
“The market is still very short here, and still is. That could provide fuel for BTC to test at least 21.4K in the short term,” part of the tweet read. is reading.
Tedtalksmacro added that there is “already underway” pressure based on bitcoin’s rebound from multi-week lows below the $20,000 mark.
Other popular market participants have preferred to return to the downside in the short term.
“Among the madness today, Bitcoin is still doing well. I expect another drop to the temporary support area around $19,200,” Crypto Tony Tell followers.
The views, ideas and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
