The world of cryptocurrency is known for its volatility, with prices rising and falling on a regular basis. However, the recent collapse of the USDC stablecoin has caused investors to fear that the entire market could be on the verge of a catastrophic crash. Though several analysts assure a rebound for the crypto market soon, the rising FUD situation is forcing investors to liquidate their holdings to avoid any massive loss.
USDC’s Dramatic Fall Sends Shockwaves Through Crypto Industry
Following a significant sell-off, the global crypto market experienced a widespread rebound on Saturday morning, with Bitcoin and Ethereum prices increasing by 5% and 6%, respectively. Nonetheless, top stablecoins USDC, DAI, and USDD saw significant depegging, attributed to the lingering effects of the Silicon Valley Bank crisis on the crypto market.
Amid a tumultuous week for cryptocurrencies, the loss of its U.S. dollar peg by Circle’s $43 billion USDC stablecoin has left Bitcoin, Ethereum, and other major cryptocurrencies preparing for significant volatility. For the first time since November, the total market capitalization of cryptocurrencies fell below $920 billion, and within the past 24 hours, over $200 million in futures tied to cryptocurrency were liquidated.
What to Expect from Market Next?
Even though the USDC’s price has lost value, some traders are wagering on a slow rebound towards the $1 mark by purchasing USDC at a lower price, which could result in a potential 10% profit if USDC reaches its dollar peg.
Market experts believe that USDC will soon gain the $1 mark as Circle has five more banks for its cash reserves, and its $3.3 billion exposure out of $40 billion will not affect the USDC much. However, leading assets like Bitcoin and Ethereum are currently experiencing a short squeeze, with massive funds being poured in the last 24 hours.
If USDC continues to decline, it may lead to a significant downward trend for the price of Bitcoin, given that the average funding rates have reached their most negative point since the FTX incident in November 2022. If Bitcoin opens a daily candle below the $19.5K level, it may initiate a death rally in the market, plunging several assets to December levels.
This week, the price of Bitcoin has declined by 10% following the collapse of the crypto-friendly Silvergate Bank. As a result, the combined crypto market has lost $100 billion, and the prices of the top ten cryptocurrencies, such as Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon, and Solana, have all experienced significant drops.
In addition, the forthcoming CPI data could potentially trigger a sharp decline in the crypto market, especially if the data leads to a 50-basis point rate hike, which would result in an extended bearish trend for numerous assets.
The post appeared first on Coinpedia
