Unexpected Volatility Shakes Circle's USDC Stablecoin
In a surprising turn of events, Circle's USDC stablecoin, which is typically pegged to the US dollar, experienced unexpected volatility on the Binance exchange platform. During a market-wide sell-off triggered by skepticism surrounding the approval of a spot bitcoin ETF, the value of USDC dropped as low as $0.76. This temporary depegging caused a stir in the cryptocurrency market.
Multiple Price Drops and Quick Recoveries
Between 12:10 and 12:21 UTC, USDC witnessed three distinct price drops against its trading pair with tether (USDT) on Binance. The lows reached were $0.76, $0.803, and $0.80, but each time, the stablecoin quickly recovered back to its $1 peg. This pattern of depegging and recovery suggests a lack of sufficient liquidity and the potential impact of large sell orders.
Lack of Liquidity and Derivatives Liquidation
The depegging of USDC on Binance can be attributed to a lack of liquidity when significant sell orders for USDC were placed in exchange for USDT. The Binance market depth for the USDC/USDT pair revealed an imbalance, with more upside liquidity. This meant that any sell order exceeding the $6.1 million liquidity floor could push the price below its usual fluctuation of $0.98. Additionally, the market was influenced by a $500 million liquidation in derivative positions, triggered by speculation regarding the SEC's rejection of spot bitcoin ETF applications.
Unusual Volatility for a Fiat-Backed Stablecoin
The volatility exhibited by USDC is noteworthy because it is typically known for its stability as a fiat currency-backed stablecoin, maintaining a 1:1 ratio with the US dollar. Significant drops in value can have implications for trust and perceived stability in the crypto market. However, this particular incident appears to be a contained event.
Similar Depegging on Okx Exchange
Binance was not the only exchange to experience the depegging of USDC. Okx also encountered a similar issue, although to a lesser extent, with USDC dropping to $0.955. Interestingly, the depegging on Okx started earlier than on Binance, beginning at 12:01 UTC and persisting until 12:21 UTC. This contrasts with the snap-back recoveries observed on Binance's platform.
In conclusion, the temporary depegging of Circle's USDC stablecoin on Binance and Okx caused a stir in the cryptocurrency market. The unexpected volatility during a market sell-off raised concerns about trust and stability. However, it is important to note that these incidents were contained and quickly recovered. It will be interesting to see how this event affects the perception and adoption of stablecoins in the future.
What stablecoin do you prefer to use? Share your thoughts and opinions in the comments section below.
Frequently Asked Questions
Is buying gold a good way to save money for retirement?
Buying gold as an investment may not seem very appealing at first glance, but when you consider how much people spend on average on gold per year worldwide, it becomes worth considering.
Physical bullion is the most popular method of investing in gold. There are many ways to invest your gold. You should research all options thoroughly before making a decision on which option you prefer.
For example, purchasing shares of companies that extract gold or mining equipment might be a better option if you aren't looking for a safe place to store your wealth. If you are looking for cash flow from your investment, buying gold stocks will work well.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs can include stocks of precious metals refiners and gold miners.
What are the advantages of a IRA with a gold component?
The benefits of a gold IRA are many. It can be used to diversify portfolios and is an investment vehicle. You decide how much money is put in each account and when it is withdrawn.
You also have the option to roll over funds from other retirement accounts into a gold IRA. If you are planning to retire early, this makes it easy to transition.
The best part about gold IRAs? You don't have to be an expert. These IRAs are available at all banks and brokerage houses. Withdrawals are made automatically without having to worry about fees or penalties.
There are, however, some drawbacks. Gold is historically volatile. Understanding why you invest in gold is crucial. Is it for growth or safety? Is it for security or long-term planning? Only then will you be able make informed decisions.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. One ounce doesn't suffice to cover all your needs. Depending on your plans for using your gold, you may need multiple ounces.
A small amount is sufficient if you plan to sell your gold. You can even live with just one ounce. But you won't be able to buy anything else with those funds.
What is a Precious Metal IRA (IRA)?
An IRA with precious metals allows you to diversify retirement savings into gold and silver, palladium, rhodiums, iridiums, osmium, or other rare metals. These are “precious metals” because they are hard to find, and therefore very valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Bullion is often used for precious metals. Bullion refers only to the actual metal.
Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.
A precious metal IRA lets you invest in bullion direct, instead of purchasing stock. This allows you to receive dividends every year.
Precious metal IRAs do not require paperwork nor annual fees, unlike regular IRAs. Instead, you pay a small percentage tax on the gains. Plus, you get free access to your funds whenever you want.
Statistics
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
External Links
finance.yahoo.com
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 1991 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's not legal – WSJ
forbes.com
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
bbb.org
How To
The best way online to buy gold or silver
First, understand the basics of gold. Gold is a precious metallic similar to Platinum. It's very rare and is used as money because of its durability and resistance to corrosion. It is difficult to use so people prefer to buy jewelry made from it to gold bars.
Today, there are two types available in gold coins: one is legal tender and the other is bullion. Legal tender coins are those that are intended for circulation in a country. They typically have denominations of $1, $5 or $10.
Bullion coins are only minted to be used for investment purposes. Their value increases over time because of inflation.
They are not exchangeable in any currency exchange system. If a person purchases $100 worth of gold, 100 grams of the gold will be given to him/her. The $100 value is $100. Every dollar spent on gold purchases, the buyer receives one gram of gold.
When looking to buy precious metals, the next thing you should be aware of is where it can be purchased. There are many options for buying gold directly from dealers. First, your local currency shop is a good place to start. Another option is to go through a reputable site like eBay. You can also look into buying gold online from private sellers.
Private sellers are individuals who offer to sell gold at retail or wholesale prices. You pay a commission fee between 10% and 15% for each transaction when you sell gold through private sellers. A private seller will usually return less money than a coin shop and eBay. This option can be a good choice for investing in gold because it allows you to control the price.
Another option for buying gold is to invest in physical gold. You can store physical gold much more easily than you can with paper certificates. However, it still needs to be safe. To ensure that your physical gold remains safe, you need to secure it in an impenetrable container such as a vault or safety deposit box.
You can either visit a bank, pawnshop or bank to buy gold. A bank will provide you with a loan that allows you to purchase the amount of gold you desire. Small establishments that allow customers to borrow money for items they have brought are called pawnshops. Banks tend to charge higher interest rates, while pawnshops are typically lower.
A third way to buy gold? Simply ask someone else! Selling gold can also be done easily. A company such as GoldMoney.com can help you set up a simple bank account and get paid immediately.
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By: David Sencil
Title: USDC Temporarily Depegs on Binance Amidst Crypto Market Sell-Off
Sourced From: news.bitcoin.com/usdc-stablecoin-temporarily-depegs-to-0-76-on-binance-amid-market-turbulence/
Published Date: Thu, 04 Jan 2024 14:30:31 +0000
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