Welcome to This Week in Crypto, where we cover the top trending headlines in the cryptocurrency industry. The world of crypto news moves fast, and we’re here to bring it to you for your weekly digest. This week, we’re looking at the impact of Silicon Valley Bank’s closure, the U.S. government moving large amounts of Bitcoin, and Vitalik Buterin selling a large amount of altcoins. Enjoy this week’s top stories!
Collapse of Silicon Valley Bank Depegs USDC and other Stablecoins
Silicon Valley Bank (SVB) was shut down by the California Department of Financial Protection and Innovation last Friday, marking the second bank closure in less than a week. Like Silvergate, which closed last Wednesday, SVB had a number of clients in the cryptocurrency industry – most notably Circle, the creator of popular stablecoin USD Coin (USDC). The crypto firm confirmed on Twitter that $3.3 billion of its $40 billion reserves were locked up in the failing bank, which is not FDIC insured.
Once the crypto community heard this news, USDC depegged, meaning that it was no longer traded at $1 USD. The stablecoin lost more than 10% of its value when it hit $0.87 on Saturday, marking a historical all-time low for a crypto that was intended to be $1 USD at all times. Its price is slowly returning to $1 as the community slows its reaction, and Circle has said that it will back the $3.3 billion itself to preserve stability if SVB is unable to return it.
U.S. Government Moves $1 Billion in BTC, Some Onto Exchanges
Multiple wallets connected to the U.S. Government’s seizure of Bitcoin from the Silk Road marketplace moved over 50,000 Bitcoin (worth about $1 billion) last week. While the majority of the Bitcoin was transferred internally, over 9,000 were transferred to crypto exchange Coinbase. Members of the crypto community voiced concerns online about the selling pressure the government could apply to the market if they sold mass amounts of Bitcoin at once, potentially driving the price down. Bitcoin’s price temporarily dipped due to the fear associated with the transfers, but recovered shortly after.
Vitalik Buterin Sells $700K+ of Useless Altcoins
Ethereum co-founder Vitalik Buterin made headlines last week when he sold over $700k of altcoins that were reportedly sent to him without asking. A wallet belonging to him sold over 500 trillion SHIKOKU, 10 billion Cult DAO, and 50 billion Mops for a total of about 440 ETH. Given the large quantities of tokens that he held, the altcoins were not worth very much, and his sales tanked the price of each token. SHIKOKU’s price dropped 86% after Buterin sold more than half the circulating supply, which is 1 quadrillion. He later mentioned that these tokens have “no cultural or moral value” and that he believes people will lose most of their money if they invest in them.
