What is the Stable Cryptocurrency Market? Why is it Dropping?

Stable cryptocurrencies are currencies whose price is pegged to the US dollar. This helps to maintain the link between cryptocurrencies and fiat money. In the crypto world, many investors use stablecoins for different purposes.

What is the Stable Cryptocurrency Market? Why is it Dropping?

Stable cryptocurrencies are usually the harbor where investors take refuge during crypto market declines. The most important feature of stable coins is that they are indexed 1:1 to the US dollar. Therefore, it is important to keep stable coins as close to the US dollar as possible. Stable cryptocurrencies are fast to transfer, reliable, and available 24/7.

What Are the Types of Stable Cryptocurrencies?

Stable cryptocurrencies, as we mentioned in our article, are currencies pegged to the US dollar. The most popular stablecoin backed by the US dollar is Tether (USDT). One of the most popular types of stable coins is crypto-backed currencies. The most popular crypto-backed currency is DAI.

Algorithmic stable coins are not backed by any cryptocurrency or US dollar. Instead, they are created using algorithms that peg to an asset or US dollar. The most popular algorithmic stablecoin is Basis.


There are many types of stable coins and many different stable coins in the current market. The most popular ones are as follows:

  • Tether (USDT)
  • Binance USD(BUSD)
  • True USD(TUSD)
  • USD Coin (USDC)
  • DAI
  • USD Digital (USDD)

Stablecoin prices are relatively safer currencies that do not fluctuate greatly, unlike the crypto market.

Why are Stablecoins Dropping?

Given that the primary purpose of stable coins is to keep fluctuations to a minimum, the price of stable coins is expected to remain stable. However, due to the recent developments in the market, many stable coins have started to decline. The biggest reason for the decline started with the collapse of Silicon Valley Bank.

Silicon Valley Bank Collapse Impacts Stable Cryptocurrency

The Silicon Valley bank was recently shut down by the California Department of Financial Protection. This development, which will affect many people, primarily affected the USDC stablecoin. The connection of Circle, the USDC stablecoin provider, with the collapsed Silicon Valley bank has worried many crypto investors. After the crisis, rumors about USDC started to emerge.

Circle’s Connection to Silicon Valley Bank

USDC provider Circle’s claim that it holds about $8.67 billion in USDC reserves in the Silicon Valley bank was the start of the decline. USDC is one of the most popular stable coins on the Ethereum blockchain, launched jointly by Circle and Coinbase in 2018. The fact that such a popular stablecoin was linked to the crisis caused a sharp decline.

What is the Stable Cryptocurrency Market? Why is it Dropping?

Falling Stablecoins

The fall hit USDC first. Following the events, USDC has fallen 10% in the last 24 hours. At the time of writing, the USDC price is currently trading at $0.903822. In addition, the loss of the stablecoin’s 1:1 stablecoin has reduced confidence in the popular stablecoin.

USDC seems to have taken the biggest hit, but other stable coins have also been affected by the crisis. In the last 24 hours, DAI has fallen by 10%, while USDD has dropped by 7%.

Will USDC Collapse?

Following the decline, Coinbase, one of the founding companies of USDC, announced on Twitter that USDC had stopped withdrawals and conversions. With this move, “Is USDC collapsing?” questions arose, while many investors who held their assets to USDC were victimized.

Stablecoin Move from Binance

Binance, one of the largest known centralized cryptocurrency exchanges, was recently exposed to some regulations for its own stablecoin BUSD. On this, Terraclassic moved to add USD to its exchange. Following the Silicon Valley bank crisis, Binance announced that it had opened BNB/TUSD, BTC/TUSD, ETH/TUSD, TUSD/USDT, USDC/USDT, and USDP/USDT trading pairs for trading.

BUSD Auto Conversion Stopped

Binance announced that BUSD auto conversions would be discontinued. Users who wish to convert their BUSD balances can do so manually via Binance Convert.

Fee Promotion

Binance will introduce a 0% fee on BNB/TUSD, BTC/TUSD, ETH/TUSD, TUSD/USDT, USDC/USDT, and USDP/USDT trading pairs effective March 11, 2023, at 14.00 UTC. The zero-fee promotion will remain in place until further notice.





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