Five Things to Know in Crypto Today: USD Coin Depegs on SVB News

Key Insights:

• Silicon Valley Bank collapses, sending the crypto market into another tailspin before Elon Musk chatter reached the news wires.
• US Department of Justice appeals the Court decision allowing Binance.US to acquire Voyager Digital.
• Huobi Token (HT) sees a flash crash on insolvency rumors.

Crypto Market Extends the Losing Streak to Five on US Banking Woes

On Friday, the crypto market fell for the fifth consecutive session, its second five-day losing streak of 2023 and the longest since July 22.

Fed Fear took a back seat on Friday, with the all-important US Jobs Report sending mixed signals. Nonfarm payrolls spiked for a second month, while the US unemployment rate unexpectedly rose to 3.6%. Significantly, wages grew at a slower pace easing pressure on the Fed.

While the stats were crypto-friendly, news from the US banking sector was bearish. On Friday, news hit the wires of US regulators shutting down Silicon Valley Bank, the second Main Street victim in a week.

The news sent the crypto market to a Friday low of $873.25 billion. However, speculation that Elon Musk could acquire the beleaguered bank to support his aspirations to turn Twitter into a mega bank reversed the session losses, leaving the market cap with a modest $1.22 billion loss.

US DoJ Appeals Binance.US Greenlight to Acquire Voyager Digital

On Thursday, the US Department of Justice appealed the Court decision allowing Binance.US to acquire Voyager Digital. The DoJ wasted little time in filing the appeal. Before the filing, the US Committee on Foreign Investment in the United States (CFIUS) had raised concerns over national security.

A Binance.US acquisition would enable Voyager Digital customers to recover 51% of deposits held with Voyager at the time of the bankruptcy filing. A blocked deal could leave customers with hefty losses.

Voyager Token (VGX) slid by 11.35% on Friday to end the session at $0.3303. VGX was down 1.97% to $0.3238 this morning. On Thursday, VGX slumped by 28.04%.

Huobi Token (HT) Sees a Flash Crash on Liquidity Crisis Rumors

On Thursday, Huobi Token (HT) tumbled by 32.58% to end the day at $3.2362. However, the intraday losses were far more significant, with a flash crash sending HT to a session low of $1.18822. HT slumped by 75% before Tron (TRX) founder Justin Sun stepped forward to ease immediate fears of another crypto collapse.

Justin Sun set up a 100 million USDC liquidity fund and further attempted to allay fears of another crypto winter victim, saying,

“The operation of Huobi Global exchange is SAFE, the wallets are SAFE, and the backend is SAFE. The recent market fluctuations and the leveraged liquidations were caused by few users triggering a cascade of forced liquidations in the spot and HT contracts market.”

Sun, an adviser to the exchange, added,

“Currently, all work is proceeding steadily and there are no unexpected incidents, and these fluctuations are simply a result of market behavior.”

The comments supported a partial recovery of the Thursday sell-off, with HT rising by 23.22% to end the day at $3.9875. However, HT was back in the red this morning, falling by 2.11% to $3.9033.

Stablecoin Woes Return with USDC Losing the Peg

The fallout from the collapse of Silicon Valley Bank continued this morning. While the crypto market was in positive territory, USDC lost its dollar peg, sliding to a morning low of $0.9045. The de-pegging came as investors responded to news of Circle holding $3.3 billion of USDC reserves at Silicon Valley Bank. The SVB news raised concerns over whether USDC has adequate reserves.

The January monthly attestation showed that USDC held reserves with Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank, and Silvergate Bank.

Amidst heightened crypto market uncertainty, Binance CEO CZ looked to reassure investors, saying that Binance has no exposure to SVB.

Main Street Contagion Reaches the Crypto Market

Coinbase and Binance suspended USDC conversions as Main Street hits the crypto market. Coinbase announced on Twitter, saying,

“We are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity, conversions rely on USD transfers from banks that clear during normal banking hours. When banks open on Monday, we plan to recommence conversions.”

SEC and US lawmaker responses to the latest US banking crisis will draw the interest of crypto investors.