USDC Depegging: Circle Assures Normal Operations

Circle Internet Financial's USDC stablecoin, ranking as the second-largest stablecoin with a market cap of $42 billion, underwent a depegging from the U.S. dollar due to contagion stemming from the collapse of Silicon Valley Bank. This development led to a drop in the USDC/USDT trading pair, which plummeted to as low as 94 cents on Kraken, marking its lowest price point since April 2021. However, it managed to recover to approximately 98 cents as of 02:54 UTC on Saturday.

USDC is designed to maintain a 1-to-1 peg with the U.S. dollar, yet concerns regarding the ramifications of Silicon Valley Bank's downfall prompted its decline from $1 on Friday. A portion of USDC's cash reserves had been deposited at the now-failed bank, raising apprehension that the funds backing the stablecoin might be inaccessible.

Stablecoins like USDC play a critical role in the foundation of the cryptocurrency industry. When their value deviates significantly from the pegged fiat asset, such as $1 for USDC, it signals apprehensions about their financial stability.