MetenaStablecoin: definition and the USDC depeg
A crypto-asset designed to hold a stable value, usually pegged to a currency such as the dollar. Often used as a reserve so you are not 100% invested.
Definition
A stablecoin holds its value through reserves (dollars, Treasury bills) or a mechanism. USDT and USDC, the two most used, are backed by reserves held by their issuer.
Stable does not mean risk-free. The value depends on the quality of the reserves, the bank that holds them and the market’s trust. When one of these gives way, the price can move away from $1, sometimes for several days.
How to read the chart
The green line marks the target peg: $1. The grey bars run from each day’s low to its high, and the bright line follows the closing price against USDT.
The red dot marks the low reached during the crisis.
Worked example
On 10 March 2023, Silicon Valley Bank failed while Circle, the issuer of USDC, held part of its reserves there. On 11 March, USDC hit a low of $0.88. It was back above $0.995 on 14 March, once deposits were guaranteed by the US authorities.
In Metena
Metena counts stablecoins as a reserve, but not as a risk-free one: the stress test includes a stablecoin depeg, among them the USDC depeg of March 2023.
Notify me at launchRelated terms
- Money management
- Managing the size of your positions and your exposure: how much to risk per holding, what reserve to keep, which limits never to cross.
- Stress test
- Simulating your rules through a historical shock, such as the March 2020 crash, the LUNA collapse or the FTX bankruptcy, to see what they would have absorbed.
- Rebalancing
- Adjusting the portfolio to get back to the planned allocation when one holding has risen or fallen too far compared with the others.
- MiCA
- The European regulation on crypto-asset markets, which governs issuers and service providers. Good regulatory news improves the quality of a thesis, not the timing of an entry.
Related guides
- Writing your investment thesis and invalidation conditions
- How to write a crypto investment thesis, turn it into rules and set invalidation conditions, with the real examples of Terra-LUNA and FTX in 2022.
Put these ideas into practice.
Write your strategy in a few minutes: Metena analyses it when you ask and explains each term in context.
Notify me at launchEducational content. It is not investment advice. Crypto-assets carry a high risk that can go as far as the total loss of capital.