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The second-largest stablecoin, USDC, from Circle Internet Finance, which has a $42 billion market valuation, de-pegged from the dollar as a result of the Silicon Valley Bank collapse. The price of the USDC/USDT trading pair on Kraken fell as low as $0.94, marking its lowest level since April 2021. Concerns over the effects of Silicon Valley Bank’s bankruptcy caused USDC to decline from $1 on Friday, despite the fact that it is intended to retain a 1-to-1 peg with the U.S. dollar.
Lately, the market has been chaotic with the collapse of the SVB Bank and Signature Bank. This is bound to have negative long-term extents. Let’s assess to what extent.
Biden Administration to bail out collapsed banks
Emergency procedures were implemented by US banking regulators on Sunday night to stop any possible spillover from Silicon Valley Bank’s failure. One of the procedures is making sure depositors at the bankrupt bank can access all of their funds. The news was made after regulators on Sunday liquidated Signature Bank, the second failed institution in a week. According to the announcement, depositors in Signature would likewise be fully reimbursed.
Larry Mcdonald Predicts Crash
The Bear Traps Report founder Larry McDonald said on “Mornings with Maria” that the Fed is trying to catch up as inflation has started to rage. He added to this by saying that the 21 Lehman systemic risk indicators that look at equity and credit point to one of the highest probabilities of a crash in the stock market looking out 60 days.
As the Fed begins its most aggressive rate hike campaign since the 1980s to combat decades-high inflation, McDonald claimed that the outflow of capital from middle-class families has been “spectacular”. The consumer price index is still around three times higher than the pre-pandemic average, but gradually declining from a peak of 9.1% reached in June of last year.
Given the current state of affairs, McDonald’s prediction does not appear to be far-fetched.
But, every cloud has a silver lining, and there are ways to profit from such markets. Make sure your investments are diversified and do extensive research.