Circle’s Losses and the Future of USDC

03/11/2023 09:10 • Crypto & Markets • 62 views

On March 11, Hal Press, CEO of North Rock Digital, a hedge fund, tweeted that Circle held 77% of the reserves in the treasury bills of 1 to 4 months, providing a lower limit of 0.77 for USDC; The total loss of Circle is expected to be 0.8% to 1.5% of USDC at most; Therefore, we have chosen to continue to buy at US $0.88, and have previously bought at US $0.935; The USDC is likely to be completely re-anchored eventually.

Hal Press: USDC is finally or will be completely re-anchored

Analysis based on this information:

In the context of the digital asset market, Hal Press, CEO of North Rock Digital, a hedge fund, tweeted on March 11 about Circle, a global financial technology firm that specializes in digital assets, holding 77% of the reserves in the treasury bills of 1 to 4 months, providing a lower limit of 0.77 for USDC. USDC (USD Coin) is a digital currency pegged to the US dollar, which serves as a stablecoin that allows for borderless transactions with lower volatility.

According to Press, the total loss of Circle is expected to be 0.8% to 1.5% of USDC at most, implying that Circle’s financial position is still relatively stable. Despite this expected loss, North Rock Digital has decided to continue buying USDC at a price of $0.88 and has already bought at $0.935, clearly indicating that they have faith in the long-term potential of the digital asset.

Moreover, Press predicts that USDC is likely to be “completely re-anchored eventually,” which could be interpreted as a shift in the way USDC’s value is pegged to the US dollar. As of now, USDC is backed by various reserves, including US Treasury bonds, commercial paper, and certificates of deposit. However, such reserves have their pitfalls and can lead to losses in terms of interest rates, liquidity risk, and market volatility.

This tweet from Press sheds light on the emerging trends of the digital asset market, such as the importance of reserve assets, backing for stablecoins, and hedging strategies. The stablecoin market has witnessed significant growth over the past few years, as it offers several advantages over traditional cryptocurrencies such as Bitcoin in terms of transaction speed, transaction cost, and stability.

In conclusion, the tweet from Hal Press underscores North Rock Digital’s confidence in USDC’s potential as a stablecoin and shows that the firm is not deterred by the expected loss faced by Circle. As the digital asset market matures, the role of reserve assets, hedging strategies, and backing for stablecoins will continue to expand, and investors’ interest in these assets will only strengthen.

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Circle’s Losses and the Future of USDC

Hal Press: USDC is finally or will be completely re-anchored

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