Market Update: The Crypto market takes a plunge as USDC loses its peg to the US dollar.

It’s unusual to discuss stablecoins during a market watch, but things are different now. The second-largest stablecoin started losing its dollar parity as soon as it was revealed that Circle holds about $3.3 billion of its USDC reserves in the struggling bank SVB. Almost immediately, it fell to $0.93. As investors switch to other stablecoins, its market cap has decreased by more than $5 billion in a single day.

The stability of the American banking sector is a subject of growing concern. The collapse of Silvergate Bank and its closure, as well as Silicon Valley Bank’s (SVB) closure by the California Department of Financial Protection and Innovation, are a few of the factors that contributed to the cryptocurrency market’s decline below the $1 trillion market cap threshold. For cryptocurrency exchanges and middlemen, Silvergate was a crucial fiat gateway network.

SVB’s closure was not explained by the California Department of Financial Protection and Innovation. Nonetheless, it stated that the financial institution would be the first FDIC-insured institution to fail in 2023.

Silicon Valley Bank possessed over $200 billion in assets and provided financial services to several crypto-focused venture firms, including Andreessen Horowitz and Sequoia Capital.

The altcoins, which are thought to be significantly more volatile than stablecoins, are doing a little bit better right now. Following a 2.3% rise, ETH has recovered $1,400. BNB is roughly $275. More gains are also being made by ADA, DOGE, DOT, SHIB, and AVAX.