Circle’s USDC dollar-pegged stablecoin fell to as low at $0.74 on three separate occasions today following a marketwide sell-off spurred by a report casting doubt over whether a spot bitcoin (BTC) ETF will be approved this month.
Between 12:10 and 12:21 UTC, USDC suffered three spikes down to $0.74, $0.80 and $0.79 against its tether (USDT) trading pair on Binance; the price immediately snapped back to $1 on all three occasions. This can occur when a trader sells USDC for USDT and there isn’t sufficient liquidity to maintain the $1 peg.
The 2% market depth on Binance for the USDC/USDT pair is skewed to the upside, with $26 million in orders stacked up to $1.02 and $6.1 million in orders stacked down to $0.98, according to CoinMarketCap. This means that when a trader makes a sell order larger than $6.1 million, the price would fall below $0.98. There was $6.2 million worth of volume at 12:10 UTC followed by $4.3 million at 12:21 UTC.
More than $500 million in derivative positions were liquidated following a report by Matrixport, which predicted the SEC would reject a number of spot bitcoin ETF applications this month.
It’s worth noting that this trading pair has experienced several slight depegs over the past few months, although none of those exceeded 4% in either direction.
The last time USDC lost its peg was in March following the collapse of Silicon Valley bank, when it traded down at $0.86 after it was revealed that Circle had a portion of funds backing the stablecoin held at the beleaguered bank.
