Bitcoin (BTC) refused to let the $20,000 support on March 11 drop in favor as the weekend opened to a battle for lost ground.
Bitcoin shakes USDC depeg
Data from Cointelegraph Markets Pro and Trade show BTC/USD showed around $20,200 at the time of writing.
A brief dip below $20,000 overnight was short-lived, and sentiment appeared more stable as initial panic about United States bank stability subsided.
The collapse of Silicon Valley Bank (SVP), which dealt a fresh blow following Silvergate to some crypto firms, continued to play out.
At the center of the debacle was payment technology company Circle, which overnight disclosed part of its stablecoin USD Coin (USDC) reserve fund with SVB.
USDC immediately began to slide from its US dollar peg and was only redeemable at $0.91 at the time of writing, while at one point Bitcoin made over $26,000 in USDC value on major exchange Kraken.
“If the USDC has only 90% support, the equilibrium price is not $0.90. The equilibrium price is ZERO”, Corey Clipston, Swan Bitcoin CEO, reacted.
“Everyone has an incentive to redeem for $1 as soon as possible. You don’t want to be in the last 10% when all the money is already gone.”
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market cap, would not fail outright.
A TweetThe circle said it has five other bank partners to manage its USDC cash balances.
Financial ratios reflect FTX sentiment
Beyond the USDC, nerves were predictably high among traders.
Related: Circle’s USDC Instability Has Domino Effect on DAI, USDD Stablecoins
Average Financial ratios They were the most negative since FTX in November 2022, indicating a strong belief that further losses could still be in store for Bitcoin.
Analyzing the implications, however, commentator TedalxMacro argued that a higher level of bearish bias could fuel higher “short pressure” in BTC/USD.
“The market is very short here. That could fuel a short-term test of at least 21.4k for BTC,” read part of a tweet. According to.
Tedtalksmacro added that a contraction is already “well underway” based on Bitcoin’s bounce back from a multi-week low below the $20,000 mark.
Other popular market participants favored a pullback in the short term.
“Amidst today’s madness, Bitcoin is looking good. I expect another drop to the $19,200 interim support zone,” Crypto Tony said followers.
The views, opinions and opinions expressed herein are those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.