USD coin drops to $0.74 due to peg loss – returns to $1 soon | CoinDesk JAPAN

USD Coin (USDC), Circle’s dollar-pegged stablecoin, fell sharply three times on the 3rd, dropping to $0.74 at one point. This comes after the entire crypto asset market (virtual currency) plummeted due to reports casting doubt on the prospect that a Bitcoin spot ETF (exchange traded fund) would be approved this month.

Between 12:10 and 12:21 Coordinated Universal Time (UTC), major cryptocurrency exchange Binance experienced three sharp drops in its trading pair USDC/USDT with Tether (USDT). They reached $0.74, $0.80, and $0.79, respectively. All three times, the price quickly returned to $1. The sharp drop in USDC/USDT occurs when there is not enough liquidity to maintain the $1 peg when traders sell USD coins and buy Tether.

USDC/USDT chart (TradingView)

According to CoinMarketCap’s Binance data, the market depth of 2% of the USDC/USDT price is biased upwards, and orders accumulated in the price range up to $1.02 are worth $26 million (approximately 3.77 billion yen). (exchanged at 145 yen to the dollar), and up to $0.98, it is 6.1 million dollars (884.5 million yen). In this situation, if a trader places a sell order above $6.1 million, the price will fall below $0.98. At 12:10 UTC, there was trading volume worth $6.2 million, followed by $4.3 million worth of trading volume at 12:21 UTC.

More than $500 million (about 29 billion yen) in derivatives following a report from crypto asset service provider Matrixport predicting that the U.S. Securities and Exchange Commission (SEC) will reject numerous Bitcoin spot ETF applications this month. The position has been liquidated.

It is worth noting that the USDC/USDT trading pair has experienced several small peg losses over the past few months, but they have not exceeded 4% of the price in either direction.

The last time the USD coin lost its peg was in March after the Silicon Valley Bank bankruptcy. The USD coin fell to $0.86 after it was revealed that Circle Inc. was holding some of the funds backing USDT in distressed banks.

｜Translation and editing: Rinan Hayashi
｜Image: Piret Ilver/Unsplash
｜Original text: USDC Stablecoin Momentarily Depegs to $0.74 on Binance