[kart23]

So USDC is currently trading at $0.93. Which, if you believe in Coinbase, is free money. And if you don't, then its very bad news for the company and possibly worse news for the banks that are keeping the USDC reserves, because they are about to have a massive bank run on monday.

https://coinmarketcap.com/currencies/usd-coin/

[verteu]

It's only free money if the probability of depeg/collapse/bankruptcy is zero. One thing I've learned from Anchor protocol, Celsius, FTX, etc: The probability is never zero.

[NelsonMinar]

Well, a free 8% return over a weekend if all goes perfectly.

Interestingly Tether also reacted to this news by going up to $1.03 briefly. That's not really good either, but it makes sense as a symmetric thing. It'd be an arbitrage opportunity except the market is so broken you can't execute it reliably.

[EVa5I7bHFq9mnYK]

They will return to peg all right, just find more money, not a big deal. Too lucrative a cash cow - get $44B of deposits and ain't gotta pay a lick of interest.

[bandrami]

Even crypto can't avoid the Impossible Trinity. Free movement of capital, a fixed exchange rate, and a steady money supply: you can only have 2 at once.

[paulpauper]

now .89

there are no freebies in finance. no one knows what is left. probably less than many think.

[koolba]

Coinbase should be buying that USDC on chain. They can guarantee it's worth $1 to themselves.

[sneak]

The fact that they're not (as you note, it's free money) is itself a gigantic red flag.

[tylersmith]

They can't if the USD backing the USDC is stuck in SVB.

[PeterisP]

Well, not all USD is stuck in SVB, at least according to what they claim. If Coinbase knows that they have the reserves to back USDC, or 93% of the reserves to back USDC, then them buying back any USDC on the open market at 90% or less is huge amounts of certain profit, while everyone else has to gamble on what the Coinbase actual capabilities are and in many cases are willing to accept a haircut to gain certainty.

[VagueMag]

The problem is that Coinbase probably has no way to say for sure what percentage of the reserves will actually be liquid on Monday. Other banks which held USDC reserves included Signature Bank of NY and Silvergate, both of which are also looking shaky.

[sour-taste]

I think that only holds up while people still have faith in the coin. Once that faith is gone Coinbase can buy as much as they want the coin is worthless.

[gus_massa]

If it's fully backed by liquid stuff, they can just buy everything at $.90 and pocket the remainder 10% and get and early retirement.

If it's fully backed by illiquid stuff, the problem is how much the crash sale will eat from their 10% retirement plan.

If it's very illiquid and they can only sell it at 80%, the price of the coin will drop even more. If it's only illiquid for the weekend as they claim, it may go back to $1 on Monday.

[koolba]

I mean with their on chain liquidity. They’d have first right to honor the exchange with themselves so unlike someone else trying to redeem it, they have no counter party risk. Each $.80 token the buy on chain could write off a $1 USDC position.

[xwdv]

Not that easy. If they buy it all up that only cements the value at their entry point.

[lxgr]

How so? If it‘s eventually redeemable for $1, the market price should not matter.

Whether that is still the case is the big question.

[xwdv]

If it was redeemable for a dollar it would never have been sold for 0.89