According to data from CryptoSlate, nine of the top 10 stablecoins by market capitalization are trading below their dollar peg as the market reels from the contagion triggered by the removal of the USDC stablecoin from Circle on March 11.
USDC lost its peg after Circle announced that about $3.3 billion of its cash reserves were held by collapsed Silicon Valley Bank – triggering unprecedented redemptions as investors traumatized by multiple collapses in 2022 began trading USDC for other stablecoins and cryptocurrencies.
Stablecoins struggling with stability
As of press time, nearly all major stablecoins are struggling to maintain their peg, including Binance’s BUSD, which is trading just below the peg at $0.9988.
The biggest loser is USDC, which has lost nearly 10% of its value and is currently trading at $0.917. Circle tried to allay fears of a total collapse and said it remained resilient despite its exposure to troubled banks. So far, it has continued to honor 1:1 buyouts.
Some traders and analysts assume that the stablecoin is trading underneath its actual value even if there was a 0% chance of recovering its deposit. However, majority sentiment points to a quick resolution of the matter within weeks based on previous FDIC coverage cases and the nature deposits from Circle – the sale being attributed to panic and trauma.
DAI is the second most affected stablecoin and is currently trading at $0.936. Based on data from the chain, around $563 million worth of DAI was burned as the stablecoins rout gripped the markets.
GUSD fell to $0.96 at one point, but has since recovered to $0.988 at press time. However, he has yet to recover his anchorage.
Tether’s USDT appears unaffected by current market conditions and is currently trading above its peg at $1.01.
The stablecoin has benefited from the global selloff and its dominance is increasing by the minute as investors continue to trade other coins for USDT.
Most funds also favor USDT, with many exchanging a portion of their USDC reserves for USDT. For example, on-chain data shows that Hashed, Spartan Group, and Signum Capital traded millions of USDC for USDT after depeg.
Meanwhile, Jump Trading, Wintermute Trading, Genesis Trading, and BlockTower Capital traded millions of USDC for cash through Circle and Coinbase.