Bitcoin Forum

Could massive crash impact stable coins?  like USDC or BUSD

For example if we will have a massive crash due to regulation and BTC is going to 5-12k how would it effect stable coins?

During a massive crash I have seen coins like USDT trade for 0.90 dollars, so they can be affected if there is an important crash in the price of bitcoin, however after the crash is over stable coins go back to their original value, so in a  way they can be a source of unexpected gains despite the crash as you can easily earn some money during those difficult times, however make sure the stable coin that you are buying is a reputable one as you do not want the same that happened to those which invested in UST to happen to you.

Stablecoins like USDT or BUSD backed by USD or government bonds and some other real assets, then I think if there is a big crash with bitcoin, it will barely affect stablecoins. Here we're just talking about bitcoin's price drop, not bitcoin's death or something that makes bitcoins no more. Because bitcoin disappears, the crypto market will also disappear.

USDT losing peg is due to the loss of confidence in stablecoins caused by UST, algorithmically stable coins will suffer if bitcoin or other altcoins plummet as algorithmically stablecoins are backed by the cryptocurrency.

There are times before when stablecoins like USDT suffered from crashes in just a short period of time, but the price is stable after some time. I remember this after the issue on UST, and the market is really crashing during that time, one of the issue why UST lost its value before, but UST and USDT is different kind of stablecoin.

It's better if you watch whole chart of USDC or BUSD. There were some times when these stable tokens worth less than 1 dollars. that proves that massive crash can give impact to the price as liquidity got drained and the price traded below the stable price.


Those bitcoin holders may dump big chung of bitcoin that will drained liquidity from the market and dumping the price of stable token if there would not be enough liquidity

Doubt of it. Only those stabelcoins that arent major could experience a massive crash could affect the price. Most majors are possibly will be remain stable since people will buy it or exchange it to most major alts. Many profiters already in stablecoins and waiting for some entry points so it will rebalance the market demand.

There are actually a few instances of stablecoins like USDC or USDT losing their peg, but their recovery was almost immediate. I don't think there's a huge risk involved with the two mentioned stablecoins, regardless of the market situation. The ones that can be affected are mostly algorithmic ones, backed by volatile funds. UST, for instance, was backed by Luna and Bitcoin reserves. Both are volatile assets, which is a recipe for disaster.

This doesn't mean that all algorithmic stablecoins are bad. There are actually decent ones like Frax or Magic Internet Money (MIM). However, compared to USDT and USDC, they are way more likely to encounter stability issues during bear markets. There are several examples of algorithmic stablecoins deviating from their $1 peg listed on CoinMarketCap as we speak. Some examples include Neutrino USD (USDN), USDD, which lost its peg a few weeks ago, or USDX.

Obviously people convert there Bitcoin and altcoin to stablecoins on market crash so the stablecoins price usually valued above the 1$ pegged due to the increasing demand. There’s no way it will crash like UST did because all the USDT that converts into fiat automatically burns out of the circulating supply that control the price. The only way a stablecoin will crash is a direct attack on its market.

I think the answer must be yes. We must have learned from what happened with tether and another stable tokens in the market. It's all about how strong liquidity to prevent the dump to happen even it was peg with fiat money but it's always be determined by liquidity in the market.
I saw that if USDC and BUSD have better legalization compared with tether as stable token but they are all the same. I think that this is actually affected by so many factors.

I don't know, but if the previous collapse was not enough to be "massive crash", then the concern may extend to TOP 10 crypto (even BTC & ETH,) a collapse again by more than 80% means that we may return to the levels of 2000 dollars.

BUSD problem would be very big if there was a direct problem with Binance, such as Hacking and government regulation or others.
As for USDT, it will be the last stable currency to collapse.

When bitcoin is dip traders always sells out their currencies to a stablecoin such as Busd, usdt and Dai While I particularly sells to my local currency because stable coin can be affected by price changes 0.09% or 0.08% which is to say it could dropped from $1 to $0.99 or $0.98 in heavy dip. Apparently we have seen Luna done something unimaginably.

Luna been into huge issue but when it comes in other stable and the popular once it will not change too much in price and will just be close in its price when rounded  and will go back in $1 once the market recovers. Stable coins will not be affected too much unless the project is a scam or tge project itself have some problems.