A stablecoin depeg is any sustained deviation from a stablecoin's reference price, almost always $1.00 USD. Small depegs happen often. Catastrophic ones (USDC to $0.87 during the SVB collapse in March 2023, UST to $0 in May 2022, BUSD pressure after the Paxos halt in February 2023) have wiped out billions in minutes. This guide walks through the six causes that drive every historical depeg, the warning signals to watch, and the practical steps a holder can take to limit exposure.
​

Updated May 2026.
​

A depeg is when a stablecoin trades meaningfully away from its $1.00 peg on secondary markets, either below (a discount) or above (a premium). The market price is set by exchange order books and DEX pool ratios, not by the issuer. Issuers can only mint and redeem at par, so when redemption channels clog or fail, the secondary price diverges.
​

Most depegs are small and fast. USDT routinely drifts to $0.997 or $1.003 during high-volatility hours and snaps back within minutes through arbitrage. The depegs that matter are the ones that last hours or days, the ones traders cannot arbitrage away because something structural has broken. The CoinGecko historical price chart shows every five-minute deviation back to issuance for each coin.
​

Reserve insolvency, bank runs, algorithmic failure, regulatory action, DEX liquidity crises, and exchange-specific halts. Every historical depeg event since 2018 fits one of these six causes, and most large events combine two or three. The table later in this article maps each major depeg to its cause and recovery profile.
​

If the reserves backing a fiat-collateralized stablecoin lose value or become inaccessible, the peg breaks. The canonical case is USDC during the Silicon Valley Bank failure on March 10–13, 2023. Circle disclosed $3.3B of USDC reserves trapped at SVB after the FDIC took the bank into receivership. USDC traded down to roughly $0.87 on Coinbase and Curve before the US Treasury, Federal Reserve, and FDIC announced on March 12 that all SVB depositors would be made whole. USDC recovered to $0.99+ within 48 hours. Bloomberg's coverage of the disclosure and Circle's post-event statement document the timeline.
​

The lesson: even fully fiat-backed stablecoins inherit the credit risk of the banks holding their cash. Issuers responded by diversifying custody (Circle now uses BNY Mellon, BlackRock-managed money market funds, and short-dated US Treasuries directly rather than relying on regional bank deposits).
​

When holders rush to redeem at once, the issuer's slowest leg (KYC review, T+1 banking, primary dealer capacity) cannot keep up with secondary market sells. The secondary price drops below $1.00 even though the reserves are intact. USDT traded to roughly $0.95 in May 2022 during the Luna and 3AC contagion. Tether processed over $10B in redemptions in two weeks. The peg held because Tether kept redeeming, but the secondary discount persisted while the queue cleared. CoinDesk's reporting documented the redemption queue.
​

The lesson: a working redemption channel does not prevent depeg pressure on secondary markets during fear events. Mass-redemption depegs are usually shallow (3–10%) and recover in days to weeks rather than minutes.
​

Algorithmic stablecoins rely on a mint-and-burn relationship with a paired volatile asset, with no external reserves. When demand collapses, the algorithm cannot recapitalize and the death spiral runs to zero. TerraUSD (UST) is the only large historical case. UST depegged from $1.00 on May 9, 2022, traded to $0.30 by May 11, and reached effectively $0 by May 13 as Luna's market cap collapsed from $40B to under $100M. Bloomberg's collapse explainer and the SEC's February 2023 complaint against Terraform Labs document the mechanics.
​

The lesson: pure algorithmic stablecoins without exogenous collateral have a structural failure mode. Modern hybrids like USDe (Ethena) hold real collateral (ETH and BTC spot positions) hedged with perp shorts, which is mechanically different from UST and has not depegged through three market cycles as of Q1 2026.
​

When a regulator forces an issuer to stop minting, the supply becomes a wasting asset. The clearest case is BUSD, which was issued by Paxos under a partnership with Binance. On February 13, 2023, the New York Department of Financial Services ordered Paxos to halt minting BUSD. BUSD held its peg in the immediate aftermath because reserves were intact and redemptions stayed open, but trading discounts of 0.3–0.5% persisted on Curve and Binance for weeks as holders rotated into USDC and USDT. By Q4 2024 BUSD supply had fallen from $16B to under $50M.
​

The lesson: regulatory halts cause slow-bleed depegs rather than sharp crashes, but the long-run outcome is the same. Track the NYDFS, OCC, ESMA (MiCA), and major exchange policy pages for halt risk on any stablecoin you hold.
​

Onchain peg stability depends on Curve, Uniswap, and Aerodrome pools staying balanced. When a pool tilts heavily toward one token (for example, the Curve 3pool reaching 80% USDC after holders dump in fear), the AMM price drops far below the $1.00 redemption price. Arbitrageurs would normally close the gap by redeeming with the issuer, but during a fear event redemption rails are slow and arbitrage capital is risk-off. Curve's 3pool composition and the Uniswap stableswap pools are the leading indicators most onchain traders watch.
​

The lesson: DEX prices can lag the issuer's true peg by hours. Holding through a liquidity crisis usually recovers full value; selling into a tilted pool locks in the loss.
​

A stablecoin can trade at par on one venue and at a discount on another. This happens when an exchange halts deposits or withdrawals, when a fiat off-ramp closes, or when regional regulation strands inventory. USDC traded at different prices on Coinbase, Binance, and Curve during the SVB weekend. USDT has historically traded at discounts on Korean exchanges where won banking limits create one-way capital flows.
​

The lesson: exchange-specific depegs are not the same as a true issuer-level depeg. Check the price on the deepest spot pair (usually USDT/USD on Kraken or USDC/USD on Coinbase) before treating a price quote as the peg.
​

The six largest documented depeg events since 2022, with low, recovery time, root cause, and the lesson holders took away. Lows are from CoinGecko historical data; event coverage from Bloomberg, CoinDesk, and Reuters.

Five signals show up in the hours and days before a serious depeg. Declining attestation cadence, where an issuer skips or delays a scheduled monthly or quarterly transparency report. Reserve composition shifts toward riskier assets (long-duration treasuries, secured loans, crypto). Peg arbitrage failing on Curve and Uniswap, where the discount stays open for hours instead of seconds. Mass redemption queues at the issuer or on the largest exchange. Exchange halts on deposits or withdrawals for a specific stablecoin.
​

None of these signals are individually proof of trouble. Two or three appearing together within 48 hours is the pattern that preceded USDC-SVB, USDT-Luna, and BUSD-NYDFS. DeFiLlama's stablecoin dashboard tracks supply changes (a proxy for net redemptions) in real time, which is the easiest dashboard to keep open.
​

Three practical defenses work for retail and treasury holders. First, diversify across at least two issuers with different reserve structures (USDC plus USDT plus a tokenized treasury like BUIDL or OUSG). The 2023 USDC-SVB event hit USDC and DAI together; USDT and PYUSD did not move. Second, watch the Curve 3pool composition daily. If one stablecoin's share rises above 70% on a falling supply, the market is signaling stress before headlines arrive. Third, set DEX limit orders at $0.97 as a circuit breaker. A passive stop-sell at $0.97 sits out of normal market noise (which rarely breaches $0.995) but executes ahead of a serious depeg.
​

Treasury operators add a fourth layer: hold a portion of stablecoin reserves directly in tokenized money market funds (USDYC, Lift, BUIDL) where redemption rights are NAV-based rather than peg-based, which removes secondary market depeg risk entirely. Tokenized treasuries do carry their own duration and operational risks; they are not stablecoins.
​

Fiat-reserved stablecoins held in short-dated US Treasuries (USDC, PYUSD, RLUSD, GUSD) carry the lowest peg risk in normal conditions but the highest single-counterparty risk if their custodian bank fails. Overcollateralized crypto-backed stablecoins (DAI, USDS) hold more buffer (typically 150%+ collateralization) but inherit the depegs of their collateral, as DAI's March 2023 move showed. Delta-neutral synthetics (USDe) carry funding-rate risk and exchange counterparty risk; the design is new enough that the worst case has not been tested in a full liquidity crunch.
​

None of these designs are immune. A well-diversified stablecoin allocation treats each design as a different risk profile rather than ranking one as universally safest. See Is USDC safe and Is Tether safe for issuer-by-issuer breakdowns.
​

When a depeg starts, the speed at which a holder can rotate into a different stablecoin on a different chain matters more than the absolute peg discount. Eco Routes lets a user swap from one stablecoin on one chain to a different stablecoin on a different chain in a single call across 15+ networks. During the March 2023 USDC-SVB event, holders who could move from USDC on Ethereum to USDT on Tron in one transaction captured a 10%+ price gap. Eco shortens the reaction window when a depeg starts.
​

Is USDC safe in 2026
​

Is Tether safe in 2026
​

Best stablecoin in 2026
​

Is USDT safe to hold
​

USDC vs USDT compared
​

Sources and methodology. Historical depeg prices cross-checked against CoinGecko five-minute candles. SVB-USDC timeline from Circle's official statement and Bloomberg. Luna and UST collapse from Bloomberg and the SEC complaint against Terraform Labs. BUSD halt order from NYDFS. USDT mass-redemption coverage from CoinDesk. Onchain liquidity data from Curve and DeFiLlama.
​