Saturday is turning up to be an extremely troublesome trading session for the USD Coin (USDC) and its traders. This is because it rarely happens when a stablecoin as big as USDC ends up losing its peg.
USDC Lost its Dollar Peg
The trading value of the USDC token should stick to the dollar peg, and it should be at a 1:1 ratio with the US dollar. Unfortunately, things have turned south for the stablecoin as it has ended up getting de-pegged.
The investors are concerned about the entire situation and are hoping that the stablecoin rebounds to the 1:1 level against the dollar.
As of now, the trading value of the USDC has fallen below the 90 cents mark. The situation could have been better if the traders had kept their composure but they didn’t, which resulted in the asset’s value decline.
The data suggests that the traders panicked just as the USDC lost its de-peg and start to decline in value. Initially, the USDC was over the 90 cents mark but with panic kicking in, things turned for the worst.
With the traders losing their confidence in the asset, they flocked to other stablecoins, which pulled the USDC trading price even lower.
As an enormous amount of funds left the USDC network, it ended up becoming destabilized. This resulted in pulling the value of the stablecoin below the 90 cents mark.
Despite the recent downfall, it is not the traders that are to be blamed. Given the history of the crypto and stablecoin industries in the year 2022, it was natural for them to react in this manner.
Given the circumstances, the only thing that the traders would have thought of would be to save their capital. This is exactly what they had in mind and they acted accordingly.
Lowest Level Hit by USDC
Due to recent developments, the lowest level that the USDC hit was 87 cents. Although the traders were afraid of even more decline the situation got better for the asset as it hit that level.
With traders regaining their senses and coming back to the USDC, the value of the token started to recover.
That was the time when the rebound was witnessed in the trading price of the stablecoin. The token soon ended up getting moved over the 90 cents mark.
This was a promising comeback for the asset as the traders do not have to look for other stablecoins to keep their capitals safe and secure.
Traders Acted Fast
The most interesting fact about the decline was that there were several traders who were ready to take advantage of the trend.
Just as the trading price of USDC fell to a low of 87 cents, the traders acted fast and accumulated as many USDC as possible.
Although it is a rare occurrence these traders have managed to make a profit out of their investments in stablecoins.
Usually, the stablecoins are pegged to the dollar and they hardly lose their peg, which means investing in such assets does not promise gains.
In the case of USDC, the value of the stablecoin fell to 87 cents and that is when many traders acquired it in huge batches.
So far, the USDC trading value has surged to 92 cents, which goes to suggest that the traders have earned a 5-cent profit on each USDC they purchased.
The investors are confident that the asset would eventually repeg to the dollar, which would translate to a 10% gain on the investments.
Leverage to Hit Record Highs
Ever since the trading price of USDC hit a record low level, the leverage trades have spiked on multiple exchanges for the token.
The investors are taking full advantage of the de-peg, increasing their leverage investments. This ensures that the recovery of the USDC to the dollar price is confirmed.