Derek Ross @Derek Ross - 2y
Coinbase is not allowing USDC to be exchanged for dollars. 😂 Circle had $3.3 billion of its $40 billion of USDC reserves at collapsed Silicon Valley Bank. That effectively puts each USDC at $0.9175 instead of $1.00.
637b9 - 2y
https://stacker.news/items/150932/r/TNStacker
8b6ef - 2y
Where is the rest of the reserves and what paper do these corresponding banks hold?
34134 - 2y
And amazingly that’s exactly how it’s trading rn If they open redemptions there will be a run, and that missing $3.3 billion will become a much greater share of the reserves, meaning the price will drop in tandem. I think I finally understand economics
3b3a4 - 2y
Probably nothing™
It's honestly amazing that we didn't learn these things in high school or college. Maybe we did and I was too immature or dumb then to understand it, but I really feel like these aspects of the subjects weren't covered. Thanks Bitcoin!
9df11 - 2y
It's increasing every few hours .. about 10 hrs ago it was 0.88.. then 0.9 a bit later. Its just cope.. people are calculating usdc value like share holders... Usdc holders don't get anything if bankrupt. The board of directors get the assets..
0fea0 - 2y
But as people redeem their USDC the proportion of the remaining supply that is stuck with SVB increases… So… That value decreases with each redemption?
ebb1b - 2y
Oh dear!
1334a - 2y
Ripple effect
From Circle's website: Cash held at U.S. regulated financial institutions: Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, a division of Flagstar Bank, N.A., Signature Bank, Silicon Valley Bank and Silvergate Bank. Oof. The last two are gone now.
👀
9ef9b - 2y
From what I read, it sounds worse than $0.91. The first people that are able to redeem will get $1, but after Circle no longer has enough money to cover redemptions, USDC holders get nothing. USDC becomes completely worthless. A bank run destroys all value in USDC. I don’t know why people would take a chance on it.
Right. As a bank run or USDC run happens, it just gets worse and worse.
b9003 - 2y
Although, there’s no evidence their reserves at SVB are *gone*. On paper, there appears to be enough assets at the bank to pay out all the depositors in the coming weeks. And the bond market is trading as if that’s true. I would bet, contrary to the doomer narrative, that nearly 100%, if not 100% of deposits are going to be recovered.
1d198 - 2y
Being right both feels good and terrifying. What will happen to the lemmings… the trapped minds… the sheep in the valley of darkness. 🤨
ba182 - 2y
Of course they won't allow withdrawals before the whole thing is sorted if it ever does
e8dea - 2y
Agreed. Would be shocked if it’s less than 90% recovery for depositors.
Noerms @noerms - 2y
Lesson learned … converted all my remaining usdc tonight into btc. Put it to cold storage and will never touch stable shit again 😮💨
Yeah, SVB failed because of an deposit duration/asset maturity mismatch, which couldn’t be corrected due to the cost of rolling those assets, which was a result of terrible risk management on their balance sheet. Their completely loss of liquidity was a function of that. Not a function of the bank being insolvent.
jacob @jacob - 2y
Why would bond pricing indicate anything? Bonds and prefs are at the hold co level. The bank co is in BK. The hold co is not. The hold co has diff assets than the bank co. Previously it had claims to equity value from the bank co, in exchange for the capital it put in. That equity is now gone.
