Large Cap Stablecoins Experience Frequent Depegs
A new report from Moody’s Analytics reveals that large cap stablecoins have experienced significant fluctuations against their fiat peg. In 2023 alone, there have been 609 instances where these stablecoins depegged by more than three percent in a single day. This number is slightly lower than the 707 depegs recorded in 2022.
When referring to large cap stablecoins, it means those with a market capitalization exceeding $10 billion. According to the report, the high number of depegs highlights the volatility seen in this sector. Rising interest rates were responsible for several high-profile depegs in 2022, and this trend continued into March 2023. However, Moody’s data indicates that stablecoin depegs are common and can occur due to various macro and coin-specific factors.
Notable Instances of Stablecoin Depegs
This year has witnessed multiple instances of stablecoins depegging. For example, Circle’s USDC stablecoin dropped to $0.88 on March 11 following the collapse of Silicon Valley Bank. Additionally, the Real USD stablecoin crashed by approximately 50% on October 11. These incidents were previously reported by The Block.
Moody’s Digital Asset Monitor
Moody’s Analytics has introduced a new tool called the Digital Asset Monitor. This platform will assess the likelihood of a stablecoin depeg from its fiat currency within a 24-hour timeframe. The launch version of the monitor will track 25 fiat-backed stablecoins, including popular options like Tether, USDC, and PayPal Coin.
Hot Take: Stablecoin Depegs Highlight Market Volatility
The frequent depegging of large cap stablecoins emphasizes the volatility present in the crypto market. Despite the impact of rising interest rates and other macro factors, stablecoin depegs can occur due to a variety of reasons specific to each coin. As the industry continues to evolve, tools like Moody’s Digital Asset Monitor play a crucial role in assessing and monitoring these fluctuations. Understanding the factors that contribute to depegging is essential for investors and participants in the crypto space.
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