The stablecoins market has been, interestingly, stable with no fun or FUD around. Yet, the collapse of Silicon Valley Bank (SVB) spoiled the silence in the market as USDC was exposed to the bank for $3.3 Billion as they stated.
The FUD in the stablecoin market has always been around USDT because of the previous history of crypto investors. Since 2018, the existence and domination of USDT perceived as a threat to both crypto itself and Central Bank's own stablecoins. Printing USD is a precious privilege and this power cannot be shared with any other parties by the FED that easily.
Centralization has 2 sides
If some parties take the risk of creating and sustaining stablecoin projects, then they also prepare themselves to face serious concerns that may put them into undesired conditions. USDT accepted all these risks and stepped in. The debut of USDC was welcomed by the crypto ecosystem as the alternative to USDT was a good step for crypto.
The more focus was shifted to USDC, the riskier it became for the company to sustain growth. USDC is always loved by crypto people, crypto service providers (such as Coinbase), and regulators as Goldman Sachs is among the partners of Circle. Yet, eventually, centralization kills. We experienced it thousands of times and the result has never changed.
Diversification can be Illusionary
Look at the coins below. All of them are supposed to be $1 forever. Guess what, there are only 2 stables and tens of casualties with a FUD.
People may forget the fact that crypto is still seen as magic internet money or a gamble for a serious number of people. When everything looks stable, you can always expect something really great or terribly bad for the ecosystem.
Nothing is stable in crypto, including us. USDC will get back to its peg, I have no concern with that. The FED would not let such a devastating occasion to hit the banks in the US and Circle will cover its losses sooner or later. The peg may not happen in a month but it will be sustained again by Circle.
Too big to fall is not a real argument. Every single unit may rise or fall in finance. We may only think about the risks and possible event that may come after the FUD. What I see is that Banks will be protected if we do not want to experience another 2008 crisis.
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