Bitcoin price briefly surged to $50,000 on Binance on March 12 after the USD Coin (USDC) peg snapped, causing chaos in the market. The price rise was short-lived, and it appears to have been the result of a large order being executed in error.
Binance had only recently listed the BTC/USDC pair, and the flash spike is thought to have been caused by thin order books for the new trading pair.
The sudden price movement has been attributed to a large Bitcoin market order eating through the limit sell-orders on the pair, causing the price to spike to $50,000.
Fortunately, the futures market remained unaffected, avoiding potential short-side liquidations. However, this is not the first time exchanges have experienced flash crashes and spikes, leading to anger and refund requests from affected customers.
In August 2017, a flash crash on GDAX saw ETH prices plummet to $0.1, while the digital currency was trading around its usual value at approximately $300, due to a customer error, which led to a surge of anger and refund requests from affected customers.
USDC’s rollercoaster ride: From lows of $0.87 to peg recovery
The USDC stablecoin, which lost its peg to the US dollar, has been causing a lot of uncertainty in the market. USDC’s value dropped to lows of $0.87 on March 11 after Circle, the issuer of USDC, revealed that it had $3.3 billion exposure to the defunct U.S. bank, Silicon Valley Bank.
The situation had left USDC trading pairs unstable on other exchanges, and the BTC/USDC pair on Kraken spiked to over $26,000 due to fears about the collapse of USDC.
At the time, USDC was trading at a 10% discount, causing serious volatility in the market.
Market confidence restored
To restore confidence in the market, the US Treasury, Federal Reserve, and FDIC decided to bail out the customers of Silicon Valley Bank and Signature Bank but not the shareholders and other stakeholders, restoring the market’s confidence for the meantime.
USDC’s peg has since recovered, and the market frenzy caused by the bank’s collapse has pushed the BTC price higher, with some casualties left behind.
