Crypto: General Panic Following the USDC De-Peg by Circle

The USDC lost its peg to the dollar yesterday. Instead of trading at 1 dollar, this stablecoin from Circle saw its value drop to an alarming level on Binance. This created a situation of panic within the crypto community.

The crypto USDC dropped to $0.74

In mid-August, the USDT suffered a de-peg resulting in an exchange price of $0.9988. It wasn’t the first time that the stable, or stablecoin, of Tether could not maintain the 1:1 ratio with the US dollar during the same month. And this lasted until September.

Why has the USDT become an “unstablecoin”? Among other causes, analysts have pointed to a massive liquidation on major cryptocurrency exchanges. Some even went as far as to accuse Binance and Changpeng Zhao of foul play against Tether.

Circle's $USDC stablecoin momentarily lost its peg, spiking to as low at $0.74, on three occasions today following a marketwide sell-off spurred by a report casting doubt whether a spot #bitcoinETF will be approved this month.https://t.co/RTYwlWKMs3

— CoinDesk (@CoinDesk) January 3, 2024

According to CoinDesk, the USDC stablecoin momentarily lost its 1:1 parity with the dollar three times yesterday, January 3.

Here are some details about these depegs: from 12:10 to 12:21 UTC, the USDC dropped to $0.74, $0.80, and $0.79. This was evidenced by comparing it to its trading pair USDT on the cryptocurrency exchange platform Binance.

And that’s not all: the market depth of 2% for the USDC/USDT trading pair was biased upwards on Binance. This led to staking orders of $26 million up to $1.02 and $6.1 million of orders staked up to $0.98.

In other words, when a trader places a sell order greater than $6.1 million, the price of the USDC would drop below $0.98. However, the volume was valued at $6.2 million at 12:10 UTC and $4.3 million at 12:21 UTC.