Bitcoin and ether are up as much as 4% in the past 24 hours after a sharp drop on Friday as risks of contagion from the Silicon Valley bank meltdown spread to cryptocurrency markets, specifically exposure of the bank’s USD currency-issuing circuit.
Ether (ETH) surged above $1,450 while bitcoin (BTC) jumped above the $20,000 mark on Saturday, posting early signs of market stabilization. Both symbols fell below strong resistance levels on Friday.
Other cryptocurrencies haven’t posted similar gains, however, suggesting that traders haven’t taken a risk on the lesser-known tokens just yet. Polygon’s (MATIC) is up 1.6% while BNB Coin (BNB) and XRP are up a nominal 2% in the Asian evening hours on Saturday.
There was a sudden and sharp market move on Friday as regulators closed the SVB amid a bank run. Traders panic selling their token holdings as USDC fell to 87 cents early Saturday, prompting a sell-off.
The total cryptocurrency market cap fell below $920 billion for the first time since November, while more than $200 million of tracked futures contracts were liquidated in the past 24 hours.
Nearly $60 million in bitcoin futures contracts, the most liquid among the major cryptocurrencies, were liquidated, followed by $40 million in liquidations of ether futures contracts. These liquidators likely contributed to the decline of bitcoin and ether.
Liquidation occurs when a trader does not have enough funds to keep a leveraged position open.
Meanwhile, some market analysts shrugged off US dollar concerns by pointing to US Treasury support.
80% of their assets are in the form of 6 million US Treasury bonds. single wrote Member of the Crypto Twitter community. “85% of these bills were posted in the last three months. The interest rate risk is negative.
Adam Cochran, partner at CEHV Crypto Fund, said the FIDC-insured nature of SVB suggests that concerns about USDC longevity are exaggerated.
“Good compared to the FDIC recovery process — the entity got 62% of the balances paid immediately under the Advanced Dividend process, and got 94% back through the final payment,” Cochran said. “If similar in SIVB, the maximum damage of Circle is $198 million on $3.3 billion.”
Elsewhere, Hal Press co-founder NorthRock Digital chirp That 77% of Circle’s reserves were held in US Treasury bills – cited official documents – which means that the theoretical minimum price for the USD pair was 77 cents.
“Circle holds 77% of its reserves in 1- to 4-month T-bills. These T-Bills are held by BNY Mellon and managed by Blackrock. This provides an absolute floor for the USDC pair at 0.77,” the press said.
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