In a desperate move to dodge the recent cryptocurrency market crash, a USDC holder has reportedly forked over $2 million for $0.05 USDT. This move may seem unusual, but it highlights the extent to which crypto investors are willing to go to protect their assets.
The recent crash has seen Bitcoin, Ethereum, and other major cryptocurrencies experience significant drops in value, prompting panic among investors. In response, some investors are diversifying into stablecoins like USDT, which are pegged to the value of the US dollar.
However, it’s important to note that stablecoins also carry their own risks and may not always hold their peg in times of extreme market volatility. Nonetheless, for some investors, the move is worth the risk to avoid further losses.
The cryptocurrency industry can cause panic and massive selloffs, resulting in uncontrollable price dips and deep losses for investors. One such event occurred when Circle was unable to withdraw its $3.3 billion from Silicon Valley Bank, which was shut down by the California Department of Financial Protection and Innovation. This led to massive selloffs and an unlucky investor losing deeply in a failed transaction. The USDC stablecoin depegged from the US dollar, causing some investors to exchange it for USDT. Unfortunately, one investor made a $2 million payment but received $0.05 USDT due to forgetting to set a slippage. The result was a permanent loss of funds. USDC is currently standing at $0.9169 and has lost 13.68% of its market cap. The issue started when Circle disclosed that its reserves are in different financial institutions, including Silvergate, which crashed and shuttered Silicon Valley Bank. This caused panic among investors, leading to further selloffs and exchanges like Coinbase and Binance pausing USDC conversions.