The USD Coin (USDC) stablecoin from Circle, a US-based company, has dropped to a price of 0.89 US dollars due to the fact that $3.3 billion of Circle’s funds are stuck in Silicon Valley Bank.
Circumstances leading to the problem
On March 9th, Circle attempted to withdraw its entire capital of $40 billion from the bank, but they were only able to withdraw $36.7 billion, leaving $3.3 billion trapped.

Crucial for the American economy
Dante Disparte, Head of Strategy at Circle, has highlighted that Silicon Valley Bank is crucial for the American economy. If the bank were to collapse without a federal bailout, it would have far-reaching consequences for businesses, banks, and entrepreneurs in the United States.
Ripple effect of bank collapse
To illustrate the impact of a bank collapse like Silicon Valley Bank, we can look at the response of Coinbase and Jump Trading. These companies submitted $850 million and $138 million worth of USDC to Circle, respectively. This demonstrates how the problems at one bank can quickly spread throughout the entire financial system.
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Possible bank crisis
It appears that the Federal Reserve’s interest rate hikes are now being felt in places where the central bank would prefer not to. Twitter is already abuzz with talk of a potential banking crisis. The stocks of many Western banks are plummeting, although Europe has been relatively spared so far.
Intervention from the Federal Reserve
If a banking crisis does occur, it is likely that the Federal Reserve will have to intervene. This would be a complete reversal of its policies. If more banks collapse or a situation arises that poses a threat to the entire American economy, there is a high chance that interest rates will suddenly plummet or support packages will be issued.
Impact on Bitcoin and cryptocurrency
From a Bitcoin and cryptocurrency perspective, this is an exciting period. There is a chance that Bitcoin could experience its first global recession, and it will be interesting to see what this means for its price.
The situation with Circle and Silicon Valley Bank is cause for concern for the US economy, and could potentially trigger a banking crisis. The Federal Reserve may need to take drastic action to prevent this, which could have a significant impact on the economy and cryptocurrency market. It is important to monitor the situation closely.