Nine of the top 10 stablecoins by market cap are trading below their dollar peg as the market reels from contagion sparked by Circle’s USDC stablecoin depegging on March 11, according to CryptoSlate data. .
USDC lost its peg after Circle announced that roughly $3.3bn of its cash reserves were in the collapsed Silicon Valley Bank, prompting unprecedented bailouts as investors traumatized by multiple crashes in 2022 began trading USDC for other stablecoins and cryptocurrencies.
Stablecoins struggling with stability
At press time, almost all of the major stablecoins are struggling to hold their parity, including Binance’s BUSD, which is trading just below parity at $0.9988.
The biggest loser is the USDC, which has lost almost 10% of its value and is currently trading at $0.917. Circle has tried to assuage fears of a complete collapse, saying it remains resilient despite its exposure to troubled banks. He has continued to honor 1:1 trades thus far.
Some traders and analysts assume that the stablecoin is tradingits actual value even if there was a 0% chance of getting your deposit back. However, the sentiment of the majority points to a quick resolution of the matter in a matter of weeks based on previous cases of FDIC coverage and the of Circle’s deposits, with liquidation attributed to and trauma.
DAI is the second hardest hit stablecoin and is currently trading at $0.936. According to on-chain data, roughly $563 million worth of DAI was burned as the rout of the stablecoin gripped the markets.
GUSD fell to $0.96 at one point, but has since recovered to $0.988 at press time. However, it has yet to regain its parity.
Tether’s USDT appears to be unaffected by current market conditions and is currently trading above its peg at $1.01.
The stablecoin has benefited from the general selloff and its dominance is increasing by the minute as investors continue to trade other coins for USDT.
Most funds also prefer USDT, with many exchanging portions of their USDC reserves for USDT. For example, on-chain data shows that Hashed, Spartan Group, and Signum Capital exchanged millions of USDC for USDT after the depeg.
Meanwhile, Jump Trading, Wintermute Trading, Genesis Trading, and BlockTower Capital exchanged millions of USDC for cash via Circle and Coinbase.