{
  "$schema": "https://degreesofsatoshi.com/encyclopedia/schemas/article-v1.json",
  "schemaVersion": "1.0.0",
  "id": "stablecoin-depegging",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/stablecoin-depegging/",
  "collection": "stablecoins",
  "title": "Stablecoin depegging: observe the price, then investigate the cause",
  "description": "A depeg can reflect local liquidity, blocked redemption, backing losses or a failed stabilization mechanism. Learn how to distinguish the evidence.",
  "aliases": [
    "depegging",
    "stablecoin price failure"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T15:09:00.630Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "A stablecoin depegs when its market price departs materially from its intended reference value. The deviation can reflect trading conditions, impaired redemption access, doubts about backing or a failed stabilization mechanism. The price alone does not identify the cause or establish whether the peg will return.",
    "claimId": "stablecoin-depegging-quick-answer",
    "sourceIds": [
      "circle-terms",
      "circle-svb",
      "terra-order"
    ]
  },
  "keyFacts": [
    {
      "label": "Observation",
      "value": "Name the venue, quote currency, time and size behind the price.",
      "sourceIds": [
        "circle-terms"
      ],
      "id": "observation",
      "claimId": "stablecoin-depegging-fact-observation"
    },
    {
      "label": "Banking example",
      "value": "Circle’s March 2023 announcement discussed a $3.3 billion reserve deposit at SVB.",
      "sourceIds": [
        "circle-svb"
      ],
      "id": "banking-example",
      "claimId": "stablecoin-depegging-fact-banking-example"
    },
    {
      "label": "Recovery",
      "value": "An intervention or recovery does not guarantee future stability.",
      "sourceIds": [
        "terra-order"
      ],
      "id": "recovery",
      "claimId": "stablecoin-depegging-fact-recovery"
    }
  ],
  "prerequisites": [
    "stablecoin-peg-vs-market-price"
  ],
  "sections": [
    {
      "id": "separate-causes",
      "heading": "Four different problems can look like one chart",
      "sourceIds": [
        "circle-risk",
        "circle-svb",
        "terra-order"
      ],
      "paragraphs": [
        "A thin trading pool can produce a poor price even when another venue works normally. A payment disruption can make sound assets temporarily hard to reach. A reserve loss can reduce expected recovery. A stabilization mechanism can also fail to attract buyers or finance redemptions. Each can appear as a discount on a chart.",
        "The distinction affects the evidence needed. A local-liquidity explanation needs executable quotes elsewhere. A banking explanation needs information about custody and settlement. A backing explanation needs assets, liabilities and rights. An algorithmic explanation needs the actual mint, burn and intervention record."
      ]
    },
    {
      "id": "historical-bank-event",
      "heading": "A dated example: the March 2023 banking shock",
      "sourceIds": [
        "circle-svb"
      ],
      "paragraphs": [
        "In its announcement dated 12 March and published 13 March 2023, Circle stated that $3.3 billion of USDC reserve deposits had been held at Silicon Valley Bank and would become available after the authorities’ deposit-protection action. This is a historical issuer statement about a specific event, not today’s reserve composition.",
        "The case shows why off-chain access belongs in a stablecoin explanation. A blockchain can continue processing token transfers while uncertainty concerns assets and institutions outside it. The continued operation of the token contract does not by itself resolve that uncertainty."
      ]
    },
    {
      "id": "reporting",
      "heading": "Describe recovery and loss without forecasting them",
      "sourceIds": [
        "circle-terms",
        "terra-order"
      ],
      "paragraphs": [
        "Suppose a token with a $1 target sells at $0.90. Selling 1,000 units at that price yields $900 before costs. Waiting preserves exposure to the token’s future outcomes; it does not establish a claim that the missing $100 will be recovered. This is a numerical illustration, not a recommendation to trade or hold.",
        "Record the observation, competing explanations and confirmed changes separately. In the UST record, the SEC described third-party intervention in a prior depeg. A return toward par can therefore be evidence of a successful intervention without proving that the underlying design can withstand another run."
      ]
    }
  ],
  "faq": [
    {
      "question": "Is every small price movement a crisis?",
      "answer": "No. A small venue-specific deviation can arise from trading costs or liquidity. Define the deviation and investigate its scope before assigning a cause.",
      "sourceIds": [
        "circle-terms"
      ]
    },
    {
      "question": "Does a depeg prove the issuer is insolvent?",
      "answer": "No. Illiquidity, operational access and uncertainty can affect price independently of a complete balance-sheet shortfall.",
      "sourceIds": [
        "circle-risk",
        "circle-svb"
      ]
    }
  ],
  "claims": [
    {
      "id": "stablecoin-depegging-quick-answer",
      "articleSlug": "stablecoin-depegging",
      "statement": "A stablecoin depegs when its market price departs materially from its intended reference value. The deviation can reflect trading conditions, impaired redemption access, doubts about backing or a failed stabilization mechanism. The price alone does not identify the cause or establish whether the peg will return.",
      "sourceIds": [
        "source-3f274c8c1e62ebb9",
        "source-063c331ff17c4380",
        "source-481192ca52ef4728"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4 and 13–16"
        },
        {
          "sourceId": "source-063c331ff17c4380",
          "locator": "March 12, 2023 announcement, published March 13"
        },
        {
          "sourceId": "source-481192ca52ef4728",
          "locator": "December 20, 2024 release and order summary"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T15:09:00.630Z",
        "reviewer": "automated independent verification",
        "notes": [
          "Circle historical press release is published March13 with March12 dateline, and states $3.3bn at SVB; article retains those dates and issuer attribution.",
          "SEC UST intervention finding supports distinguishing recovery from autonomous-mechanism proof; 1,000×$0.90=$900 is correct."
        ]
      }
    },
    {
      "id": "stablecoin-depegging-fact-observation",
      "articleSlug": "stablecoin-depegging",
      "statement": "Observation: Name the venue, quote currency, time and size behind the price.",
      "sourceIds": [
        "source-3f274c8c1e62ebb9"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4 and 13–16"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T15:09:00.630Z",
        "reviewer": "automated independent verification",
        "notes": [
          "Circle historical press release is published March13 with March12 dateline, and states $3.3bn at SVB; article retains those dates and issuer attribution.",
          "SEC UST intervention finding supports distinguishing recovery from autonomous-mechanism proof; 1,000×$0.90=$900 is correct."
        ]
      }
    },
    {
      "id": "stablecoin-depegging-fact-banking-example",
      "articleSlug": "stablecoin-depegging",
      "statement": "Banking example: Circle’s March 2023 announcement discussed a $3.3 billion reserve deposit at SVB.",
      "sourceIds": [
        "source-063c331ff17c4380"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-063c331ff17c4380",
          "locator": "March 12, 2023 announcement, published March 13"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T15:09:00.630Z",
        "reviewer": "automated independent verification",
        "notes": [
          "Circle historical press release is published March13 with March12 dateline, and states $3.3bn at SVB; article retains those dates and issuer attribution.",
          "SEC UST intervention finding supports distinguishing recovery from autonomous-mechanism proof; 1,000×$0.90=$900 is correct."
        ]
      }
    },
    {
      "id": "stablecoin-depegging-fact-recovery",
      "articleSlug": "stablecoin-depegging",
      "statement": "Recovery: An intervention or recovery does not guarantee future stability.",
      "sourceIds": [
        "source-481192ca52ef4728"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-481192ca52ef4728",
          "locator": "December 20, 2024 release and order summary"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T15:09:00.630Z",
        "reviewer": "automated independent verification",
        "notes": [
          "Circle historical press release is published March13 with March12 dateline, and states $3.3bn at SVB; article retains those dates and issuer attribution.",
          "SEC UST intervention finding supports distinguishing recovery from autonomous-mechanism proof; 1,000×$0.90=$900 is correct."
        ]
      }
    }
  ],
  "sources": [
    {
      "id": "circle-terms",
      "label": "USDC Terms",
      "publisher": "Circle",
      "url": "https://www.circle.com/legal/usdc-terms",
      "note": "USDC backing, conditional redemption, price fluctuations, no intrinsic interest, freezes, fees and eligibility.",
      "checkedAt": "2026-10-02T14:38:29.678281+00:00",
      "locator": "Sections 1–4 and 13–16",
      "version": "Response SHA-256 23312ae7a14fc5e876bce04cbc739e473da466c4a2ae2a35531ffc4cda972ca8",
      "recordId": "source-3f274c8c1e62ebb9",
      "contentSha256": null
    },
    {
      "id": "circle-svb",
      "label": "USDC reserve risk removed after Silicon Valley Bank failure",
      "publisher": "Circle",
      "url": "https://www.circle.com/pressroom/3-3-billion-of-usdc-reserve-risk-removed-dollar-de-peg-closes",
      "note": "Historical $3.3 billion reserve deposit and banking access; no current reserve estimate.",
      "checkedAt": "2026-10-02T14:38:47.482024+00:00",
      "locator": "March 12, 2023 announcement, published March 13",
      "version": "Response SHA-256 1678a0037bca77a2dccf83de12cb3b8342cc8f899852756a2f997753913d3da3",
      "recordId": "source-063c331ff17c4380",
      "contentSha256": null
    },
    {
      "id": "terra-order",
      "label": "Tai Mo Shan settlement: UST stability claims",
      "publisher": "U.S. Securities and Exchange Commission",
      "url": "https://www.sec.gov/newsroom/press-releases/2024-212",
      "note": "Historical UST mechanism, 2021 depeg intervention and misleading claims.",
      "checkedAt": "2026-10-02T14:41:32.877371+00:00",
      "locator": "December 20, 2024 release and order summary",
      "recordId": "source-481192ca52ef4728",
      "contentSha256": null,
      "version": null
    },
    {
      "id": "circle-risk",
      "label": "USDC Risk Factors",
      "publisher": "Circle",
      "url": "https://www.circle.com/legal/usdc-risk-factors",
      "note": "Operational, banking and transfer restrictions.",
      "checkedAt": "2026-10-02T14:38:29.678429+00:00",
      "locator": "Blocked Addresses; Software protocols; Claim on funds",
      "version": "Response SHA-256 0b2c30c7cbbb8058626ad7023b2c5282cb99b5bf95216d97010979846ce0e073",
      "recordId": "source-f0ded1628723f35a",
      "contentSha256": null
    }
  ],
  "related": {
    "articles": [
      "stablecoin-peg-vs-market-price",
      "stablecoin-banking-dependencies",
      "algorithmic-stablecoins",
      "stablecoin-reserve-reports"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and independent automated verification."
    }
  ],
  "citation": "Degrees of Satoshi editorial project. “Stablecoin depegging: observe the price, then investigate the cause.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/stablecoin-depegging/"
}