Stablecoins, including USDC, USDT, and USDe, do not maintain a guaranteed one-to-one peg to the U.S. dollar, according to Greg Cipollaro, Head of Research at NYDIG.
Market Dynamics, Not Fixed Rates
Cipollaro highlighted that during the market downturn on October 11, 2025, the price of USDe by Ethena on Binance dropped to $0.65. Even major stablecoins like USDC and USDT temporarily deviated from the $1 mark.
He emphasized that stability is enforced by market mechanisms, not by a fixed exchange rate:
“Stablecoins are not inherently pegged to $1. They are market-traded instruments, and their prices fluctuate around $1 due to trading dynamics.”
The perception of a guaranteed peg can create a false sense of security. In practice, arbitrage mechanisms help maintain stability: traders buy when prices fall below $1 and sell when they rise, while issuers manage minting and redemption processes based on demand.
Risks and Real-World Implications
Cipollaro noted that even widely used stablecoins can show real-time volatility, highlighting risks that users may underestimate. The recent deviation underscores that market forces, rather than absolute guarantees, underpin the stability of these digital assets.
Previously, European regulators advocated for the development of euro-denominated stablecoins as a counterbalance to the dominance of the U.S. dollar in global crypto markets.
Overall, while stablecoins aim to provide reliability, investors should remain aware of inherent market risks and the mechanisms that support their value.
