Circle’s USDC, the second-largest stablecoin by market capitalization, experienced brief periods of depegging today, dropping to as low as $0.74 on three occasions.
This volatility occurred amid a broader market sell-off triggered by a report questioning how realistic the rumored spot bitcoin ETF approval is this month.
The depegging incidents for USDC occurred between 12:10 and 12:21 UTC on Binance against its tether (USDT) trading pair. USDC’s value momentarily fell to $0.74, $0.80, and $0.79 before quickly rebounding to its $1 peg each time. Such fluctuations can happen when large USDC sell orders for USDT are placed, and the existing liquidity is insufficient to maintain the stablecoin’s $1 parity.
Binance’s 2% market depth data for the USDC/USDT pair shows an imbalance, with significantly more orders placed above the $1 mark compared to those below it. According to CoinMarketCap, there were $26 million in buy orders up to $1.02, but only $6.1 million in sell orders down to $0.98. Consequently, sell orders exceeding $6.1 million could cause the price to drop below $0.98. Notably, trading volumes of $6.2 million and $4.3 million were recorded at 12:10 and 12:21 UTC, respectively.
The broader market sell-off, which resulted in over $500 million in derivative positions being liquidated, was influenced by a Matrixport report. The report speculated that the SEC might reject several spot bitcoin ETF applications this month, contributing to the market’s bearish sentiment.
It’s important to note that the USDC/USDT trading pair has previously experienced minor depegging events in the past months, though none of these instances exceeded a 4% deviation from its peg.
Earlier in March, Circle’s token lost its dollar peg and slumped to an all-time low of $0.8 per coin after the issuer revealed it has nearly 9 percent of its $40-billion USDC reserves stuck at Silicon Valley Bank. However, the stablecoin then recovered most of its losses after Circle assured investors it would honor the peg despite exposure to failed bank. At the time, cryptocurrency traders withdrew more than $10 billion from USDC in less than three weeks even as concerns over the fallout from the Silicon Valley collapse receded.
