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The slump in USD Coin’s (USDC-USD) market cap over the last couple of days represents “the most readily apparent threat” to cryptocurrency exchange Coinbase Global (NASDAQ:COIN), as the stablecoin remains a key revenue driver for the company, Barclays warned.
On Saturday, USD Coin (USDC-USD) de-pegged from the U.S. dollar to an all-time low of $0.84 after Circle, the company behind the second-largest stablecoin, disclosed that $3.3B of the ~$40B of USDC reserves have been parked at failed lender Silicon Valley Bank.
The drop in price was accompanied by a markedly lower market cap, falling to as low as $37.3B on March 11 from $43.6B a day before, according to CoinMarketCap data. Still, the market cap has since stabilized to $40.3B — and the price drove up back to $1 — after Circle said it would backstop USDC (USDC-USD) reserves.
Despite the revival, “we see potential incremental risks to USDC itself, as the de-pegging experienced over the last few days could impact overall demand for USDC, which would be a negative for Coinbase’s P&L,” analyst Benjamin Budish wrote in a March 12 note.
In Q4, Coinbase (COIN) generated $146M of interest income from USDC (USDC-USD), representing around 23% of its total sales and ~27% of gross profit, he noted.
In the meantime, COIN climbed 9.6% as bitcoin (BTC-USD) shot up some 17% to around $24K.
Earlier, Coinbase disclosed that it had $240M of cash at Signature Bank.