USDC Stablecoin Momentarily Lost its Dollar Peg on Binance

TL;DR

• USDC momentarily dipped to $0.74 on Binance.

• The last time the stablecoin lost its dollar peg was in March 2023.

USDC Momentarily Trades Below $1

Circle's USDC dollar-pegged stablecoin momentarily dropped below the $1 peg on Binance on Wednesday. The USDC stablecoin traded below $1 on three different occasions on Wednesday following a marketwide sell-off caused by a report about a possible spot Bitcoin ETF rejection this month. 

Between 12:10 and 12:21 UTC, the stablecoin recorded three dips, down to  $0.74, $0.80 and $0.79 against its tether (USDT) trading pair on Binance. However, USDC immediately snapped back to the $1 peg on all three occasions. 

The depeg occurs when traders sell USDC for USDT and there isn’t enough liquidity in the market to maintain the $1 peg. 

The cryptocurrency market suffered huge losses on Wednesday, spurred by Matrixport’s report. Bitcoin dipped by 8% to trade around the $40k region for the first time in roughly two weeks, resulting in over $400 million worth of liquidations leveraged positions in the market. 

The USDC stablecoin lost its peg against the dollar in March 2023 following the collapse of the Silicon Valley Bank. At the time, the stablecoin traded at $0.86 following reports that Circle was holding some of the funds backing USDC in Silicon Valley Bank.