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23% of the reserve, or $9.7B is held in cash. I think on Thursday, SVB saw cash outflow requests over $40b in one day. USDC peg is so far below 1 right now the
by obblekk 4y ago
23% of the reserve, or $9.7B is held in cash.
I think on Thursday, SVB saw cash outflow requests over $40b in one day. USDC peg is so far below 1 right now there will definitely be a lot of par arbitrage Monday trying to withdraw.
Hopefully it doesn’t take longer than a day for them to settle treasury trades, and maybe some people have lost the keys to their crypto. They could also possibly have a line of credit with instant settlement assuming they’re truly solvent with marketable securities at market prices.
- bb88 4y agoCan one short USDC with leverage?
- 0x53 4y agoNot easily that I know of, the best way would be to use a defi application like compound.finance. You can deposit usdc and take a loan against it in another currency. Then you repay the loan later. However, that is just a normal short. The only real way to lever this is to keep depositing the loan money, and taking out more loans which is expensive in terms of fees.
- rabf 4y agoYou can trade it with leverage here: https://www.bybit.com/trade/usdt/USDCUSDT https://www.bybit.com/trade/usdt/USDCUSDT
- WalterSear 4y agoShort? I can't see this not returning to it's peg by the next news cycle. It's free money. SVB went bankrupt - as a business: it can't pay its bills. People are reacting to this as if the deposits have vanished entirely. If you think USDC is a shorting opportunity, short anything crypto. USDC is literally the second largest domino.
- dfadsadsf 4y agoThere is good chance that ~30% of deposits above 250k vanished. SVB really screwed up on trades. With equity at zero or close to zero, there is no backstop. Net present value of 2% securities that SVB loaded on is way below par.
- WalterSear 4y agoAh, that's different. I understood it to be ~$2 billion out of ~$200+ billion, not $60+ billion in losses. EDIT - Do you have a the $60+ billion figure? All I am seeing is a $2 billion dollar shortfall.
- babyshake 4y agoYou think USDC failing would be bigger than ETH failing? If ETH broke in a way it couldn't recover from I would think that is the second biggest domino (close to tied for first, even).
- WalterSear 4y agoSure, but Eth isn't as much of a financial domino being propped up. If the internet failed, all crypto would fail. Does that make it the biggest domino in crypto?
- humanizersequel 4y agoETH is probably a bigger domino than Bitcoin right now.
- panarky 4y agoIf you're right, then you can pick up some easy profits by buying USDC at a discount. The amount you're willing to commit is a good indicator of how confident you are in your assessment.
- pishpash 4y agoVultures are offering 60%-80% on SVB-held funds, so that's where they expect recovery to be at.
- SilasX 4y agoYes, and I have been, by accident! I borrowed USDC on Compound.finance a while ago, using wrapped bitcoin as collateral and the loan remains open. I was intending to just extract some equity from my BTC without selling it, not profit from crashes, but that effectively gives me a short position since I benefit from USDC being easier to buy and thus settle my debt. Last night I bought at a ~6% discount on Gemini.
- anonymousiam 4y agoYeah, but your BTC lost 20% of its value over the same period.
- nscalf 4y agoYep, get a loan denominated in USDC. You can lever up in USDC and buy USDT with it.
- rewtraw 4y agoYes, primarily on Bybit. It's a terrible trade to make now though.
- 323 4y agoYes, by creating a synthetic - you short BTC/USDC and long BTC/USD. This will create a USDC/USD synthetic. Both BTC/USDC and BTC/USD can offer up to 100x leverage, so the synthetic USDC will also be up to 100x. Of course, there is a long list of risks in such a trade, and if you need to ask about it it's not for you.
- dmak 4y agoI am curious to read more about the risks, but don't plan to make this trade. Could you share a few points just to give me a direction to dig deeper?
- SilasX 4y agoIt seems like the point of that comment to look knowledgeable while providing no actionable information[2] and falsely implying it’s too difficult[1], so I’m guessing no, as that would defeat their seeming objectives in making the comment to begin with. [1] which it isn’t; here’s what legit attempts at explanation look like: https://news.ycombinator.com/item?id=35113400 https://news.ycombinator.com/item?id=35113400 https://news.ycombinator.com/item?id=35113126 https://news.ycombinator.com/item?id=35113126 [2] if it weren’t, it would explained some of the terminology used, since the asker clearly isn’t deep in the business in the first place
- oarabbus_ 4y agoBinance announced today they will have USDC/USDT and other stablecoin trading pairs. https://www.binance.com/en/support/announcement/binance-adds-stablecoin-spot-trading-pairs-launches-fee-promotion-discontinues-auto-conversion-for-stablecoins-dd331bed50bb44f485e47aed132bfc02 https://www.binance.com/en/support/announcement/binance-adds... Individuals in many countries (but not the USA) have access to Leverage Trading on Binance. You could also use any of the following DeFi liquidity pools: https://nomics.com/markets/usdt-tether/usdc-usd-coin/markets https://nomics.com/markets/usdt-tether/usdc-usd-coin/markets
- echelon 4y agoThe creators of USDC could destroy their own coins to restore the 1:1 reserve peg. I doubt they'd do it, but it would immediately restore confidence. Send them to a null address or commit to burning them in software. If they can restore the reserve, they could remint them. I'm a crypto bear (with modest crypto holdings for diversification), and I think this is an opportunity for these folks to step up to the plate and show they can meet these sorts of challenges. If you can successfully navigate a bank collapse, then maybe you deserve a seat at the table. I'm not holding out my hopes for USDC though.
- WalterSear 4y agoIMHO, they are justifiably confident that this will all blow over in a few days, and that their deposits will be available to them soon after, albeit with a few percent missing. But I concur - they are showing their true colors by not defending the peg.
- patrickaljord 4y agoit's not their job to defend the peg on the open market (not to mention impossible by definition), their only product is the possibility to redeem each USDC for $1 through a circle account. We will see on Monday if they can deliver.
- SilasX 4y agoSure, it’s not technically “their job” to destroy a dollar’s worth of obligations for 90 cents. It’s just a darn good idea.
- bhaak 4y ago> The creators of USDC could destroy their own coins to restore the 1:1 reserve peg. I doubt they'd do it, but it would immediately restore confidence. Why should they? USDC is not an algorithmic stablecoin. For once, it's actually not a failure in crypto that lead to this depeg. I'm not even sure they are allowed to do it by their own contracts with their clients as long as it is not clear that the USD at SBV is really lost.
- tempsy 4y agohow is it “so far below” it’s recovered to less than a 4% discount
- charcircuit 4y agoThere is no fee to covert USDC to USD. So as long as you buying USDC and depositing it into Circle is less than $1 per USDC you make profit. As long as you make profit it makes sense to arbitrage as much as you can.
- tempsy 4y agothat’s if you have a Circle account which effectively no individual has access to. if you convert USDC to USD on Coinbase or another exchange you’re paying the market rate
- charcircuit 4y agoThe arbitrage the comment was talking about would be done by people with Circle accounts. If you don't have an account it would be in your interest to sell your USDC for as close to $1 possible. This will inflate the value of USDC on the open market until Circle account holders start to fear that they will be holding the bag.
- tempsy 4y agoif major usdc holders who have a circle account were primarily concerned with tiny arbitrage plays they wouldn’t be holding a stablecoin earning zero yield when t-bills pay 5% to begin with
- charcircuit 4y agoThis isn't a tiny arbitrage play because you can repeatedly do it for as long as circle is liquid. Even if you don't hold a lot of USDC it's selling at a discount on the open market. If it goes into a full bankrun all circle accounts will be fighting over what share of the $43.5 billion reserves that they will get.
- dragontamer 4y ago3 month (or less) Treasury Bills are damn close to cash. I don't believe they lose value in practice, not even in the rapidly raising interest rate environment of the last year. The problem at Silvergate and Silicon Valley Banks is that they bought 10 year or 30 year bonds, not 3 month bills. Its a completely different composition, with completely different properties.
- Xeoncross 4y agoWhy lock up the money for so long in such an unstable time as this? Better interest rates?
- dragontamer 4y ago> Better interest rates? You betcha. Here's the rates for March 2021. 3M would have gotten you 0.05% APY, while 10Y gets you 1.45% APY. https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202103 https://home.treasury.gov/resource-center/data-chart-center/...
- rvnx 4y agoYeah, it sounded like a perfect plan if no customers wanted to get their funds within the next 10 years. ¯\_(ツ)_/¯
- spywaregorilla 4y agoNo that's not it. You can sell the bonds any time. But now they're worth considerably less because interest rates are much higher now. They locked themselves in at rate that are now terrible for 10 years.
- Xeoncross 4y agoSo weird to think that near-zero interest rates are the best you can do for the next 10 years. I'm pretty sure everyone way saying "lock in this low interest rate before they go up again!"
- jonnydubowsky 4y agoUSDC is now back up from $0.82 to ~ $0.97