Stablecoin Mayhem Rocks Crypto Market: USDC/USDT Plunges More Than 20 Cents Before Stabilizing

Major stablecoins experienced a temporary de-peg following the price drop in the cryptocurrency markets.

The USDC/USDT trading pair, typically known for its stability, witnessed a dramatic de-peg on Binance, plunging to $0.76 and $0.8 at 20:00 and 20:15 UTC+8, respectively, before stabilizing.

On OKX, another popular cryptocurrency exchange, the trading pair fell to $0.955 around the same time.

This incident came in the wake of the panic drop in Bitcoin's value, which sent ripples throughout the cryptocurrency market.

The apex cryptocurrency reacted to a report by financial services firm Matrixport, which presented a contrarian view on the future of spot Bitcoin exchange-traded funds (ETFs) in the U.S.

The firm, which had previously maintained a bullish stance on Bitcoin, now predicted the U.S. Securities and Exchange Commission (SEC) will reject all spot Bitcoin ETF applications in January 2024.

Also Read: Bitcoin ETF Approval Date: Traders Bet 89% Chance By January 15

Despite fulfilling several SEC requirements, Matrixport anticipated that all spot Bitcoin ETF applications would fall short of a critical requirement, leading to their rejection by the SEC in January.

The firm expected this requirement might be met by the second quarter of 2024.

Stablecoins such as USDC and USDT are pegged to fiat currencies like the U.S. dollar and typically act as safe haven for traders in times of in times of heightened market volatility.

However, the unexpected drop in these stablecoins' value raises questions about their reliability in maintaining pegs during extreme market conditions.

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