As Bitcoin embarked on a battle for ground lost over the weekend on March 11, it refused to let the $20,000 support die forever. Meanwhile, BTC price saw ‘$26,000’ in USDC terms during the day. So how much can short selling increase in BTC?
Bitcoin is getting rid of the USDC de-peg!
Data from TradingView shows BTC/USD hovering around $20,400 at the time of this writing. Although Bitcoin took a short dive below the $20,000 level overnight, the mood is stabilizing as the initial panic over US bank stability subsides.
However, the impact of the collapse of Silicon Valley Bank (SVB) continues after Silvergate deals a new blow to some crypto firms. At the center of the fiasco was payment technology company Circle. Because Circle was holding the stablecoin in SVB with some of the reserve funds for USD Coin (USDC). USDC immediately started falling from the US dollar peg and fell as low as $0.91. At one point, Bitcoin reached more than $26,000 in USDC on major exchange Kraken.
Cory Klippsten, CEO of Swan Bitcoin, said, “If USDC is only 90% supported, the equilibrium price is not $0.90. The equilibrium price is zero,” he reacted. Also, Klippsten said, “Everyone has an incentive to use it for $1 as soon as possible. You don’t want to be in the last 10% when all the money is already gone,” he said.
Others believed that the situation was manageable and that USDC, the second largest stablecoin by market capitalization, would not fail completely.
Circle said in a tweet that it has five more bank partners to manage USDC cash reserves.
Financing rates mimic FTX mood
Beyond USDC, nerves among traders remained predictably strained. Average funding rates were at their worst since FTX in November 2022. This shows a strong belief that further losses could still affect Bitcoin.
However, analyst Tedtalksmacro, who analyzes the results, argues that the overwhelming bearish bias could fuel a classic ‘short squeeze’ higher on BTC/USD. “The market is still very short here,” the analyst said. And that could provide fuel for BTC to test at least $21.4k in the short term.”
Tedtalksmacro adds that a ‘short squeeze’ is already on the ‘right track’ as Bitcoin bounces from several-week lows below the $20,000 mark. Other popular market participants are in favor of a bearish reversal in the short term. Analyst Crypto Tony shared the following to his followers:
Amid today’s madness, Bitcoin is still doing well. I expect another drop to the temporary support zone around $19,200.
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