Silicon Valley Bank leaves USDC bleeding- Will it impact Stablecoin market?

ambcrypto.com:

USD Coin [USDC], lost its dollar peg on some exchanges, over concerns that reserves backing the second-largest stablecoin by market cap, were stuck in the failed Silicon Valley Bank (SVB).

Circle, the company that manages the popular Stablecoin, disclosed that $3.3 billion of the $40 billion of USDC reserves remained locked up at SVB. Thus, triggering significant FUD about the state of its reserves.

— Circle (@circle) March 11, 2023

USDC, which is supposed to maintain a 1:1 peg with the USD, fell to $0.946 at the time of writing, data from CoinMarketCap showed. Additionally, its market cap declined from $43.56 billion to 38.9 billion, a drop of over 11%.

Source: CoinMarketCap

SVB, one of the largest retail sector banks in the United States, was shut down by regulators on Friday (10 March), as the cash-strapped lender struggled with falling deposits, compounded by interest rate hikes by the Federal reserve.

According toCircle’s transparency report, Silicon Valley Bank was one of six banking partners where it held a portion of its cash reserves backing the USDC stablecoin.

This represented about 7.5% of the total reserves, which apart from cash, included the portfolio of the Circle Reserve Fund, consisting of short-dated U.S. treasuries.

As per blockchain analytics firm Nansen, Circle burned $2.34 billion worth of USDC in the last 24 hours, as jittery investors rushed to redeem dollars for their falling USDC.

Meanwhile, Coinbase, the largest cryptocurrency exchange in the United States, said that it was