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Short? 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 a

Short? 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 ago
There 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 ago
  Ah, 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 ago
You 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 ago
  Sure, 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 ago
  ETH is probably a bigger domino than Bitcoin right now.
panarky 4y ago
If 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 ago
Vultures are offering 60%-80% on SVB-held funds, so that's where they expect recovery to be at.
PheonixPharts 4y ago
> I can't see this not returning to it's peg by the next news cycle. It's free money. But isn't this the problem? If over the weekend billions of dollars of USDC is purchased at less that $1 from people expecting to cash in on "free money" come Monday, Circle is going to have to be able to ensure that that actually happens, which could easily require more liquidity than remotely possible (edit: I just realized that Circle claims that back 1-to-1 with liquid assets). Volume right now in USDC is at record highs. If all of those people are hoping to make free money on Monday, and it turns out Circle is unable to maintain that, then the entire USDC will crash almost instantly once people realize it's impossible to keep it pegged. I'm far from a crypto expert so could you clarify what I'm missing?
- daydream 4y ago
  USDC is back to $0.98 as of Saturday evening.
  - PheonixPharts 4y ago
    I don't think you understand my question or the issue at hand, but I think I have found some answers. It doesn't matter if it was already $1 right now. The assumption is that everyone purchasing USDC today when it was below $1 is planning on selling it Monday as a quick arbitrage. Assuming the peg is restored by Monday, Circle is still going to have to have a lot of liquidity to meet the demands of a huge number of people trying to realize that $1. Again, today was the highest volume ever for USDC and presumably many of those transactions are people expecting to cash out Monday. It seems very possible to me, that Circle will not be able to meet the liquidity demands of keeping the peg and fulfilling their promise of $1 USD for 1 USDC. If they falter at all, and the peg doesn't hold, then anyone holding will immediately panic and attempt to liquidate their position leading to a collapse. The piece of the puzzle I was missing is that I didn't realize that Circle claims that they have cash reserves (cash and 30-day treasuries) equal to the entire USDC market cap. So anyone who trusts that Circle has the liquidity and cash on hand to payout everything views this as free money. I would point out that this "arbitrage" existing for more than a brief moment implies there are lots of people who do not believe that Circle can meet these demands and are happily unloading their positions.

dfadsadsf 4y ago

There 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 ago
Ah, 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 ago

You 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 ago
Sure, 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 ago
ETH is probably a bigger domino than Bitcoin right now.

panarky 4y ago

If 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 ago

Vultures are offering 60%-80% on SVB-held funds, so that's where they expect recovery to be at.

PheonixPharts 4y ago

> I can't see this not returning to it's peg by the next news cycle. It's free money. But isn't this the problem? If over the weekend billions of dollars of USDC is purchased at less that $1 from people expecting to cash in on "free money" come Monday, Circle is going to have to be able to ensure that that actually happens, which could easily require more liquidity than remotely possible (edit: I just realized that Circle claims that back 1-to-1 with liquid assets). Volume right now in USDC is at record highs. If all of those people are hoping to make free money on Monday, and it turns out Circle is unable to maintain that, then the entire USDC will crash almost instantly once people realize it's impossible to keep it pegged. I'm far from a crypto expert so could you clarify what I'm missing?

daydream 4y ago
USDC is back to $0.98 as of Saturday evening.
- PheonixPharts 4y ago
  I don't think you understand my question or the issue at hand, but I think I have found some answers. It doesn't matter if it was already $1 right now. The assumption is that everyone purchasing USDC today when it was below $1 is planning on selling it Monday as a quick arbitrage. Assuming the peg is restored by Monday, Circle is still going to have to have a lot of liquidity to meet the demands of a huge number of people trying to realize that $1. Again, today was the highest volume ever for USDC and presumably many of those transactions are people expecting to cash out Monday. It seems very possible to me, that Circle will not be able to meet the liquidity demands of keeping the peg and fulfilling their promise of $1 USD for 1 USDC. If they falter at all, and the peg doesn't hold, then anyone holding will immediately panic and attempt to liquidate their position leading to a collapse. The piece of the puzzle I was missing is that I didn't realize that Circle claims that they have cash reserves (cash and 30-day treasuries) equal to the entire USDC market cap. So anyone who trusts that Circle has the liquidity and cash on hand to payout everything views this as free money. I would point out that this "arbitrage" existing for more than a brief moment implies there are lots of people who do not believe that Circle can meet these demands and are happily unloading their positions.