Stablecoins causing liquidity issues on exchanges exemplify the volatility that always seems to surprise crypto traders. noshitcoins illustrates the impact of the $USDC depeg and banking crisis on Bitcoin and crypto markets.
on March 10. The fear grew after the issuing management company Circle confirmed that $3.3 billion in reserves were held at Silicon Valley Bank.
Such an unusual movement caused price distortion across exchanges, prompting Binance and Coinbase to disable the automatic conversion of the USDC stablecoin. The decoupling from $1 bottomed near $0.87 in the early hours of March 11 and was restored to $0.98 after FDIC's successful intervention in SVB was confirmed.
Let's take a look at Bitcoin derivatives metrics to see where professional traders stand in the current market.Bitcoin quarterly futures are popular among whales and arbitrage desks. These fixed-month contracts typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement for a longer period.
As a result, futures contracts in healthy markets should trade at a 5% to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.The chart shows traders had been neutral-to-bearish until March 10 as the basis indicator oscillated between 2.5% and 5%. However, the situation quickly changed in the early hours of March 11 as the stablecoin USDC decoupled, and cryptocurrency exchanges were forced to change their conversion mechanisms.
Consequently, the Bitcoin 3-month futures premium turned into a discount, otherwise known as backwardation. Such movement is highly unusual and reflects investors' lack of trust in intermediaries or extreme pessimism towards the underlying asset. Even as the USDC stablecoin price approaches $0.995, the current 0% premium indicates a lack of leverage buying demand for Bitcoin via futures instruments.
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