Circle's USDC, which is typically pegged to the dollar, encountered unexpected volatility on the Binance exchange platform. Its value dropped as low as $0.76 amidst a market that was shaken by skepticism surrounding the approval of a Bitcoin ETF and a significant liquidation in derivatives.
USDC Depreciates Temporarily on Binance Amidst Crypto Market Sell-Off
In a surprising turn of events that caught the cryptocurrency market off guard, Circle's USDC stablecoin, which is pegged to the US dollar, momentarily depegged from its $1 value. It fell as low as $0.76 on the Binance exchange platform. This incident occurred during a market-wide sell-off, which was triggered by skepticism regarding the potential approval of a spot Bitcoin ETF this month. Notably, USDC experienced three distinct price drops against its trading pair, USDT (Tether), on Binance between 12:10 and 12:21 UTC. It reached lows of $0.76, $0.803, and $0.80 before quickly recovering back to its $1 peg each time.
This depreciation is likely due to insufficient liquidity when large sell orders were placed for USDC in exchange for USDT. The Binance order book showed a 2% market depth for the USDC/USDT pair, which indicated a bias towards the upside. This means that any sell order larger than the $6.1 million liquidity floor could drive the price below its usual fluctuation of $0.98. The instability was also influenced by a $500 million liquidation in derivative positions following a report speculating on the SEC's rejection of various spot Bitcoin ETF applications.
The volatility of USDC is particularly noteworthy considering its usual stability as a fiat currency-backed stablecoin, which is exchangeable at a 1:1 ratio with the US dollar. Such drops can have an impact on the entire crypto market, affecting trust and perceived stability. However, this incident appears to be a contained event. This is not the first time USDC has experienced a depeg; it previously traded down to $0.877 after the collapse of Silicon Valley Bank in March 2023. This situation arose because a portion of its reserves was held at the beleaguered bank.
Binance was not the only exchange to experience a depeg of the USDC stablecoin. Okx also encountered a similar issue, although to a lesser extent, with USDC dropping to $0.955. Interestingly, the depegging on Okx began earlier than on Binance, starting at 12:01 and persisting until 12:21 UTC. This is in contrast to the three snap-back recoveries observed on Binance's platform.
Which stablecoin do you prefer? Share your thoughts and opinions on this matter in the comments section below.
Frequently Asked Questions
Can I have physical gold in my IRA
Gold is money, not just paper currency or coinage. Gold is an asset people have used for thousands years as a place to store value and protect their wealth from economic uncertainty and inflation. Today, investors invest in gold as part a diversified portfolio. This is because gold tends do better in financial turmoil.
Many Americans today prefer to invest in precious metals, such as silver and gold, over stocks and bonds. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.
One reason is that gold historically performs better than other assets during financial panics. Gold prices rose nearly 100 percent between August 2011 and early 2013, while the S&P 500 fell 21 percent over the same period. Gold was one of the few assets that performed better than stocks during turbulent market conditions.
Gold is one of the few assets that has virtually no counterparty risks. Even if your stock portfolio is down, your shares are still yours. Gold can be worth more than its investment in a company that defaults on its obligations.
Finally, the liquidity that gold provides is unmatched. You can sell your gold at any time without worrying about finding a buyer, which is a major advantage over other investments. It makes sense to buy small quantities of gold, as it is more liquid than other investments. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
What Does Gold Do as an Investment Option?
Supply and demand determine the gold price. It is also affected negatively by interest rates.
Due to limited supplies, gold prices are subject to volatility. Additionally, physical gold can be volatile because it must be stored somewhere.
How much should your IRA include precious metals
You should remember that precious metals are not only for the wealthy. They don't require you to be wealthy to invest in them. In fact, there are many ways to make money from gold and silver investments without spending much money.
You might consider purchasing physical coins, such as bullion bars and rounds. Also, you could buy shares in companies producing precious metals. You might also want to use an IRA rollover program offered through your retirement plan provider.
You can still get benefits from precious metals regardless of what choice you make. Even though they aren't stocks, they still offer the possibility of long-term growth.
Their prices rise with time, which is a different to traditional investments. You'll probably make more money if your investment is sold down the line than traditional investments.
Can I keep a Gold ETF in a Roth IRA
This option may not be available in a 401(k), but you should look into other options such as an Individual Retirement account (IRA).
A traditional IRA allows for contributions from both employer and employee. Another way to invest in publicly traded companies is through an Employee Stock Ownership Plan.
An ESOP provides tax advantages because employees share ownership of company stock and profits the business generates. The money you invest in the ESOP will be taxed at a lower rate than if it were directly held by the employee.
A Individual Retirement Annuity (IRA), is also available. You can make regular payments to your IRA throughout your life, and you will also receive income when you retire. Contributions to IRAs will not be taxed
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- 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)
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement account
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Do You Need a Gold IRA to Get Retirement?
- What are the Options Types, Spreads, Example and Risk Metrics
Guidelines for Gold Roth IRA
It is best to start saving early for retirement. You should start as soon as you are eligible (usually at age 50) and continue saving throughout your career. It is important to invest enough money each and every year to ensure you get adequate growth.
Also, you want to take advantage tax-free options such as a traditional 401k, SEP IRA or SIMPLE IRA. These savings vehicles enable you to make contributions while not paying any taxes on the earnings, until they are withdrawn. They are a great option for those who do not have access to employer matching money.
It is important to save consistently over time. You may not be eligible for any tax benefits if your contribution is less than the maximum allowed.
By: David Sencil
Title: USDC Stablecoin Experiences Temporary Depreciation to $0.76 on Binance Amid Market Turbulence
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