Bitcoin Regains $20K After $200M In Crypto Liquidations; Some traders are removing USDC fears

Bitcoin and Ether rose as much as 4% in the past 24 hours after a steep fall on Friday as contagion from the collapse of Silicon Valley Bank spread to crypto markets, specifically the exposure of USD Coin issuer Circle to the bank.

Ether (ETH) rose above $1,450, while bitcoin (BTC) jumped above the $20,000 mark on Saturday to post early signs of market stabilization. Both tokens fell below strong resistance levels on Friday.

Other cryptocurrencies did not have similar gains, however, suggesting that traders were not taking risks on lesser-known tokens yet. Polygon’s matic (MATIC) rose 1.6%, while BNB Coin (BNB) and XRP rose a nominal 2% in Asian evening hours on Saturday.

Sudden and steep market movement occurred on Friday when regulators shut down SVB amid a run on the bank. Panicked traders sold their token holdings as USDC fell as low as 87 cents early Saturday, spurring a sell-off as

The total crypto market cap fell below $920 billion for the first time since November, while over $200 million in crypto-tracked futures were liquidated in the last 24 hours.

Nearly $60 million in bitcoin futures were liquidated, the most among major cryptocurrencies, followed by $40 million in ether futures liquidations. Such liquidators probably contributed to the decline of bitcoin and ether.

Liquidation occurs when a trader does not have sufficient funds to keep a leveraged trade open.

Meanwhile, some market analysts deflected lingering USDC fears by pointing to the token’s backing from the US Treasury.

“80% of their assets are in the form of 6 million US Treasuries,” wrote one Crypto Twitter Community Member. “85% of these bills have been rolled over within the last 3 months. The interest rate risk is negative.”

Adam Cochran, partner at crypto fund CEHV, said SVB’s FIDC-insured nature suggested fears about USDC’s longevity were overblown.

“Compared well for the FDIC recovery process – the entity had 62% of balances paid out immediately under the FDIC ‘advanced dividend’ process, and by final payment had recovered 94%,” Cochran said. “If similar at SIVB, Circle’s maximum damage is $198M on $3.3B.”

Elsewhere, North Rock Digital co-founded Hal Press tweeted that 77% of Circle’s reserves were held in US Treasuries – quoted official documents – meaning that the theoretical floor price of USDC was 77 cents.

“Circle holds 77% of their reserves in 1-4 month Treasury bills. These T-Bills are held at BNY Mellon and managed by Blackrock. This gives an absolute floor on USDC of 0.77,” Press said.

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