Last Updated on March 31, 2023 by Bitfinsider

Since the stablecoin’s market value dropped to about $32.5 billion over the last two weeks, a loss of about $10 billion, Circle’s USDC has continued to experience widespread redemptions.

Despite Circle providing complete redemptions without delays for USDC, Steven Zheng, director of research at The Block, stated that “it appears that the events of early March have damaged the trust crypto investors and traders have in the reliability of the stablecoin.”

In the previous day, there were almost $463 million in net redemptions, with only $24.1 million in new money issued. According to data, USDC’s market cap decreased over the same time span, falling from about $33.3 billion to $32.8 billion.

Early in March, when it was revealed that Circle had $3.3 billion in reserve funds stored in Silicon Valley Bank, problems with the stablecoin started to arise. As a result, USDC’s peg to the US dollar was broken. However, Circle CEO Jeremy Allaire declared that business would resume after U.S. federal bank regulators guaranteed the complete return of customer deposits from Silicon Valley Bank and Signature Bank. Redemptions have nevertheless persisted.

In a message on Twitter last week, Allaire addressed concerns and linked the sell-off to a broader de-risking process among investors from projects exposed to risk from U.S. banks and regulatory bodies. Since the stablecoin has “never failed to mint or redeem USDC for $1, including during the past weeks stress test,” Allaire said for Circle, “we are going to keep doing what we have always done.”

“USDC as a protocol and digital currency continues to operate on public chains, protocols, and wallets without interruption,” Allaire added.