How and why do stablecoins depeg?


Stablecoins are a type of cryptocurrency designed to have a stable value relative to a specific asset or a basket of assets, typically a fiat currency such as the U.S. dollar, euro or Japanese yen.

Stablecoins are designed to offer a “stable” store of value and medium of exchange compared with more traditional cryptocurrencies like Bitcoin (BTC) and Ether (ETH), which can be highly volatile.

The stablecoin’s value deviates from its peg

Traders and investors react to the depegging event

Arbitrage opportunities arise

The stablecoin issuer takes action

The stablecoin’s value stabilizes


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