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USDC Stablecoin Temporarily Depegs to $0.76 on Binance Amid Market Turbulence

USDC Temporary Depeg on Binance Amidst Crypto Market Sell-Off

Circle’s USDC, typically pegged to the dollar, experienced unexpected volatility on Binance, dipping as low as $0.76 amidst a market rattled by Bitcoin ETF skepticism and a significant liquidation in derivatives.

USDC Temporarily Depegs on Binance Amidst Crypto Market Sell-Off

In a surprising move that startled the cryptocurrency market, Circle’s USDC dollar-pegged stablecoin momentarily depegged from its $1 value, falling as low as $0.76 on the Binance exchange platform. This incident occurred during a market-wide sell-off, which was spurred by skepticism over the potential approval of a spot bitcoin ETF this month. Notably, USDC experienced three distinct price drops against its tether (USDT) trading pair on Binance between 12:10 and 12:21 UTC, hitting lows of $0.76, $0.803, and $0.80 before quickly recovering back to its $1 peg each time.

This depegging is likely to be the result of a lack of sufficient liquidity when large sell orders were placed for USDC in exchange for USDT. The Binance 2% market depth for the USDC/USDT pair revealed a skew towards the upside, indicating that any sell order larger than the $6.1 million liquidity floor could force the price below its $0.98 usual fluctuation. The instability was also influenced by a $500 million liquidation in derivative positions following a report that speculated on the SEC’s rejection of various spot bitcoin ETF applications.

The volatility of USDC is particularly notable given its usual stability as a fiat currency-backed stablecoin, exchangeable at a 1:1 ratio with the US dollar. Such drops can cause ripples across the crypto market, affecting trust and perceived stability, although this time appears to be a contained event. This isn’t the first time USDC has experienced a depeg; it notably traded down to $0.877 following the collapse of Silicon Valley Bank earlier in March 2023, a situation that arose due to a portion of its reserves being held at the beleaguered bank.

Binance was not alone in experiencing a depeg of the USDC stablecoin; Okx also encountered a similar issue, albeit to a lesser degree, with USDC dropping to $0.955. Interestingly, the depegging on Okx commenced earlier than on Binance, beginning at 12:01 and persisting until 12:21 UTC, contrasting with the three snap-back recoveries observed on Binance’s platform.

What is your go-to stablecoin? Share your thoughts and opinions about this subject in the comments section below.

Source

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