Do you still invest in cryptocurrencies using USDC or hold it ? if you do then you should give this post a read. So perhaps judging the recent event with the USDC Depegging you might have though about it’s time to make a change to a different stablecoin. If you hold a nice chunk of USDC dont panic sell as its a centralized currency backed by a dollar also this issue is caused due to the silicon valley bank collapse as Circle announced they had a nice sum of money in their banks so you should wait till monday once the banks open. Why? Because you would be in deep regret if you swap now in losses as sooner or later it will back to a dollar. You can also switch to a safer alternative like USDT (Tether) / BUSD (Binance USD) we recommend you to go with BUSD
What Happened With USDC ?
Stablecoin USD Coin (USDC) stopped being tied to the dollar and fell to an all-time low on Saturday after the U.S. company that made it, Circle, said that some of the reserves backing it were held at Silicon Valley Bank.
Circle said in a tweet on Friday that $3.3 billion of its $40 billion in USDC reserves are at the failed bank Silicon Valley Bank.
CoinGecko, which tracks the market, says that the coin broke its 1:1 dollar peg and fell as low as $0.88 shortly after 8:00 GMT on Saturday. By 11:20 GMT, it had recovered a little and was trading around $0.90.
Silicon Valley Bank went out of business on Friday. It was the biggest U.S. bank failure since the 2008 financial crisis, which shook markets around the world and left companies and investors without billions of dollars.
Circle said in a tweet on Friday that the company and USDC “continue to operate normally” while the company waits for more information about what will happen to Silicon Valley Bank depositors.
The U.S. cryptocurrency exchange Coinbase said in a tweet that it would not let USDC be swapped for U.S. dollars over the weekend, when banks are closed, because of “increased activity.” It plans to start swapping again on Monday.
Circle didn’t respond right away to a message sent outside of U.S. business hours asking about the dollar peg. But Circle tweeted something related to this on their twitter handle today
A financial advisor at Enigma Securities named Joseph Edwards said that the situation for USDC was “extremely serious.”
“No matter how well Circle runs its business, this kind of depeg on a stablecoin tends to destroy trust in it,” Edwards said.
“The short-term effects of this are big and hard to predict, especially once systems have to be changed to account for the fact that 1 USDC isn’t worth 1 USD for now.”
Stablecoins are digital currencies that are designed to keep the same exchange rate with “fiat” currencies, which are not backed by a physical good like gold, but by a central government. For example, a 1:1 peg to the U.S. dollar is one way to do this.
They are used to trade cryptocurrencies, and their value has gone up a lot in the past few years. With a market cap of $37 billion, USDC is the second-largest stable coin. CoinGecko says that the largest, Tether, has a market cap of $72 billion.
The price of USDC usually stays close to $1, so Saturday’s drop was a first. According to data from CoinGecko, its previous all-time low was around $0.97 in 2018. However, in 2022, when the crypto hedge fund Three Arrows Capital went out of business, it fell just below $0.99.
Traders have been on the lookout this week for signs that problems at Silicon Valley Bank and crypto-focused Silvergate (SI.N), which announced this week that it plans to stop doing business and liquidate on its own, could spread to other parts of the financial sector and beyond.
Circle, which is based in Boston, said last week that it had moved a “small percentage” of USDC reserve deposits held at Silvergate to its other banking partners.
The CEO of Binance, a cryptocurrency exchange, said in a tweet on Friday that the company had no ties to Silicon Valley Bank. Tether’s CEO, Paolo Ardoino, said the same thing.
Both Paxos, which makes stablecoins, and Gemini, which is a cryptocurrency exchange, said on Twitter that they do not work with the bank. Also this Peg Incident made a lot of Crypto Investors switch to the Alternative Stable Coin BUSD ( Binance USD) / USDT (Tether) We have compiled some reasons why someone should move to BUSD / USDT from USDC and what are the Pro and Cons of it Read below to Know more.
Overview of USDC and USDT & BUSD
The choices for storing and trading digital assets expand along with their popularity. Two digital tokens linked to the dollar, USDC and USDT and BUSD, are among the most well-liked options.
Since USDC is a “stablecoin,” its value is intended to be more stable than that of other cryptocurrencies. But, USDT is a “tether” token, which implies it is backed by a reserve of actual money.
What could possibly make investors prefer one over the other? Generally speaking, it boils down to comfort and safety.
While BUSD & USDT is used more frequently than the other coin, it is also more liquid and simpler to trade on exchanges. Moreover, it charges less than USDC.
Yet, some investors favour USDC because it is monthly audited and subject to U.S. financial authorities’ regulation. For those who are concerned about the possibility of fraud or poor management with BUSD & USDT, this offers more assurance.
Comparing and Understanding USDC and USDT
Cryptocurrencies and digital assets exist in a wide variety, giving you many possibilities to pick from. Nonetheless, USDC and USDT are two of the most widely used options. When choosing between these two possibilities, it’s critical to comprehend how they differ because each has advantages and disadvantages of its own.
A stablecoin that is backed by the US dollar is called USDC. This implies that the value of each USDC token is one US dollar. Because of this, USDC is frequently utilised as a form of value storage or as a hedge against potentially more volatile cryptocurrencies.
Another stablecoin is USDT, however it is not backed by US dollars. Instead, it is supported by Tether, a cryptocurrency in and of itself. There is always the possibility of volatility because Tether isn’t as widely acknowledged as the US dollar, even if USDT tokens can be exchanged for one dollar apiece.
The most preferred Stablecoin would be BUSD (Binance USD) which is backed by the BNB Token and the biggest Crypto exchange Binance and this looks currently the best possible option for investors as Binance is the Backbone of the crypto game and if Binance is gone crypto would be too.
Which should you select, then? In the end, it will rely on your personal demands and objectives. The USDC stablecoin might be a better option if you want a stablecoin that can be quickly converted to cash. But, USDT might be a better choice if you’re trying to trade or invest in other cryptocurrencies and BUSD would be the safest bet for your stablecoin.
Pros and Cons of Changing from USDC to USDT or BUSD
There are several options available when it comes to stablecoins. The USDC and USDT & BUSD are two of the most often used. What are the advantages and disadvantages of moving from USDC to USDT/BUSD ?
By moving from USDC to USDT / BUSD , you can be sure that your tokens will always be backed 1:1 by real US dollars. If the price of the token drops below $1.00, you can lose money with USDC because there is no assurance that there will always be enough fiat cash in the account to pay for all outstanding tokens just like how Silicon Valley Bank collapsed and made the USDC lose its dollar peg.
Another advantage of BUSD / USDT over USDC is that it is purchased and traded with more on exchanges. Thus if you have decided to make a switch to BUSD or USDT you would have more opportunities to trade or exchange the tokens with.
Several Investors’ Reasons for Switching from USDC to USDT
Circle and Coinbase jointly developed USDC, a stablecoin backed by the dollar. Tether’s USDT stablecoin is backed by the US currency. Both are employed to preserve value and reduce volatility which isnt the case right now as USDC lost its peg due to silicon valley bank getting closed, we think its time you need to look for stable coin alternatives
-USDT supports a greater number of trading pairings and is more widely available on exchanges. This facilitates trade and increases market liquidity by making it simpler to buy and sell.
-USDT has a longer history and an established track record. Investors are more assured that their money is secure as a result of this.
-BUSD is backed by the biggest organization in the crypto has been around the same time as the other Stablecoins, for now BUSD seems the safest option to keep all your stable money in as Binance is the biggest organization in crypto and if binance goes down you can lose all your hope from crypto and it will be gone for good
A variety of wallets, including hardware wallets like Trezor and Ledger, can be used to store BUSD / USDT. This increases the options available to investors for where to store their coins.
Which one ought you to pick then? In the end, it is down to your choices and requirements. The better choice for you is probably USDC if instability and openness are your top priorities. But, BUSD and USDT might be a better option if you’re seeking for a less expensive way to trade cryptocurrencies or to stack all your money in stables.
The Binance USD & USDT Argument
- More liquidity: Compared to USDC, BUSD and USDT is listed on more exchanges, making it simpler to buy and trade.
- Reduced fees: You typically have to pay a “conversion charge” when you swap currencies on an exchange. In comparison to BUSD and USDT, these fees are frequently greater for USDC.
- More adaptability: Compared to USDC, USDT and BUSD offers greater versatility. As an illustration, certain exchanges permit margin trading using BUSD/USDT but not USDC. Also, you can purchase several altcoins with BUSD/USDT that you cannot with USDC.
As you can see, there are a variety of factors that certain investors may choose BUSD & USDT over USDC. Because due to the recent events people lost their hope in these So called dollar backed coins. Keep in mind that investing is always risky, so do your homework and research before making any judgements concerning your investments. Nonetheless, for experienced investors trying to diversify their portfolios with stablecoins, switching from USDC to USDT/BUSD would be safer if done with careful thought and planning but we recommend you not to swap right now if you have money stuck in USDC as Circle is a Big Corporation and its a Centralized one so 99% of the chances are it will get back to $1 soon enough and if you switch now and then see its back to dollar again you would be pissed for sure so the best move is to stay calm and drink lots of water and not waste time looking at the USDC price chart repeatedly.