Much has happened in the crypto industry within the past week, ranging from the Bitcoin dump to the new development with SVB. After the collapse of FTX, the United States government turned its attention to the crypto industry and made strict policies. But it seems they forgot to look closely at one of the major banks in the United States of America.
The Silicon Valley Bank collapse was a rare win for the crypto industry, and at the same time, it was bad as many investors' funds were contained in the bank. However, it showed how much people can lose whenever a fiat bank collapses, compared to a crypto exchange. In the crypto market, Bitcoin and other cryptocurrencies have been bearish, creating a market crash scare.
In this article, we will share some developing stories to let you know what is happening in the crypto market this week.
It was a bad week for the crypto industry, especially for the stablecoins after USDC depegged from the original $1 to less than $0.80. This came after the news of the Silicon Valley Bank collapse — A huge amount of the reserve backing USDC was held at this bank. About $3.3 billion of the cash backing USD coin (USDC) was held at Silicon Valley Bank (SVB), so it depegged from its original value.
Immediately the news broke out that the Silicon Valley Bank had collapsed, and the stablecoin depegged from $1 to $0.91. Then subsequently, it started moving downwards to $0.81 and even up to $0.75.
Aave Halts USDC Trading
After the SVB collapse, many crypto exchanges started halting the sending and receiving of USDC from their exchange. Aave was one of the first decentralized platforms that halted the withdrawal of USDC on their platform.
Besides halting the trading of USDC on their platform, they also set the loan-to-value (LTV) ratio to zero. The major reason for doing this was to protect their user from trading a failing stablecoin. Also, it was to protect Aave from the effects of the USDC de-pegging.
South Korea Invests in Bitcoin
South Korea is one of the countries that still believe in the potential of the metaverse. Recently the country invested a whopping 24 billion Korean won ($18.1 million) to create a fund for metaverse development.
Called Metaverse Fund, it will help emerging South Korean companies to compete with other companies from other countries. This is a huge step for the country that has been actively involved in developing the metaverse economy.
Binance Converting $1 billion in BUSD to Bitcoin
A new report confirmed by Changpeng Zhao says that the apex crypto exchange Binance is converting approximately $1 billion of BUSD to Bitcoin, Ethereum, and BNB. Changpeng Zhao confirmed this on Twitter with the $1 billion BUSD from its Industry Recovery Initiative funds.
As expected, Binance says the process will be transparent so users can see what is happening within the crypto exchange. The conversion of the $1 billion BUSD to Bitcoin and other cryptocurrencies will happen on-chain for transparency.
Circle Makes Plans to Recover USDC
Circle, the issuer of the stablecoin USD Coin (USDC), is currently making plans to cover up for the downfall of the stablecoin. The stablecoin depegged after the collapse of the Silicon Valley Bank. With $3.3 billion of the cash backing USD coin (USDC) in the bank, it was logical that USDC fell hard in a bearish trend.
In a new statement, Circle has confirmed they have already started making plans to cover up for the huge amount that was slashed from their reserves. The USDC de-pegging also contributes to the downtrend witnessed in Bitcoin price and other cryptocurrencies.