Stablecoin Market Endured High Degrees of Volatility Over the Weekend as the Crypto Market Crashed

Only two of the top 20 stablecoins by market capitalization lost their peg for more than an hour, and both of them rebounded back by 1:00 am EST Monday.

The stablecoin market experienced significant volatility during the crypto market crash over the weekend, with only two of the top 20 stablecoins by market capitalization losing their peg for more than an hour. Both of these tokens, Ondo’s US Dollar Yield Token (USDY) and Blast’s USDB, rebounded back by 1:00 am EST Monday.

USDY fell by as much as 4.7%, dropping from $1.05 to $1.00, and took a little over an hour to reclaim its target price. Meanwhile, USDB faced a 5% depeg on Sunday night. The Blast-native stablecoin, which is backed by Maker’s DAI, fell as low as $0.95 and took 2 hours to reclaim its peg of $1.00.

Other stablecoins, including crvUSD, FDUSD, and USDD, also suffered brief depegs, although these tokens experienced losses of 2.5%-3% and recovered within 20 minutes.

Despite the volatility, stablecoin transfer volume hit its highest levels since June 9 over the weekend, with August 3 and 4 combining for $107 billion in transfers. This marks a 60% increase from the previous weekend’s $67 billion.

The total stablecoin market capitalization now stands at $164.4 billion, up 26% since the beginning of the year. Tether’s USDT continues to dominate the stablecoin market, accounting for nearly 70% of the total market share.

On July 28, stablecoins comprised roughly 6.5% of crypto’s total market capitalization, but reached as high as 8.7% during Sunday night’s crash as market participants sold off riskier assets and converted to stables.

Due to the sell-off, the total number of stablecoin transfer transactions hit its highest number since Aug. 25 2022, according to Atermis Terminal.

Throughout the market frenzy, Tether’s USDT was the stablecoin of choice for market participants. USDT recorded $185 billion in 24 trading volume according to TradingView compared to USDC’s $24.5 billion, and USDT dominance rose by 7%.

Besides being the largest stablecoin by market capitalization, Tether’s Q2 audit may have also provided users with a sense of safety surrounding the asset. In the company’s public statement, Tether reported $5.2 billion in additional reserves that could be used to help maintain USDT’s peg in a black swan style event.

The market faced panic selling and liquidations, which placed massive demand on stablecoin reserves. Decentralized Finance (DeFi) platform AAVE processed $400 million in liquidations on Aug 4, and their GHO stablecoin maintained its peg throughout the forced selling.

Stani Kulechov of Avara took to social media this morning to highlight the strength and said “Aave Protocol withstood market stress across 14 active markets on various L1s and L2s, securing $21B worth of value”.

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