How Panic Tanked USDC for No Good Reason (A Lesson on Keeping Your Cool)
Let’s talk about the elephant in the room: U.S. Dollar Coin (USDC).
You know, the fiat-backed currency that is supposed to always cost $1.00?
The 100% collateralized, backed-by-cash, notoriously reliable USDC?
Yeah, it dipped to $0.87 this weekend.
There are only two ways this could have happened:
First, Circle – the company that runs USDC – lost a bunch of money that keeps the asset pegged to $1.00.
That’s what everyone thought happened after Circle announced that about 8% of the money backing USDC was stored in the now-bankrupt Silicon Valley Bank.
But that’s not why USDC lost its peg, because Circle didn’t actually lose any money. By Saturday, the company assured investors that they didn’t lose a dime. All the money was safe and sound come Monday morning.
No, USDC fell victim to the other way that it can lose its peg: mass hysteria.
The second people found out that Circle had money in SVB, they pressed the panic button. They assumed the worst: all that money would be gone, and USDC would be dead. (Which, even if that money were gone, it wouldn’t be hard for Circle to replace).
But despite being blatantly wrong on a factual level, dummies did what dummies do: they sold.
Even the American Institute for Crypto Investors Discord server was popping off with worry.
I’ll say to you what I said to them. USDC is safe to use as long as you avoid this one thing…
Panic. At all costs, avoid PANIC.
If you kept your cool, waited 24 hours, or better yet ignored the markets entirely – it was like nothing even happened.
Some of you might not have even noticed. By Monday morning, USDC was back at $1.00.
That’s the beauty of fiat-backed stablecoins: as long as the issuer maintains a 1 USDC: 1 USD ratio, its value is solid.
Unless the rest of the market screws it up for us by panicking out – and of USDC, no less…really, people?
Seriously, of all the things to panic-sell? Why couldn’t it have been Dogecoin (DOGE)?
But there’s a lesson to be learned in all of this:
95% of what you read online about the cryptocurrency markets is wrong. If Twitter or CNBC are your only sources of information, losing money won’t be a question of “if” but “when?”
That’s why you need to keep your head on straight, tune in to American Institute for Crypto Investors on Tuesdays and Thursdays at 11:30 a.m. (ET), and practice your critical thinking.
I wouldn’t recommend you store money in USDC if it had the capacity to crash in two days like its competitors. Don’t you know me better than that by now?
Heck, some of my Digital Heavyweights even took USDC’s dip to churn as profit. They bought it at $0.87 and traded for 13% gains once it returned to $1.00.
While the crypto bros on Twitter were planning USDC’s funeral, my subscribers were making money and cracking jokes in the group chat.
Subscribe to Digital Heavyweights to unlock our private Discord channel.
Moral of the story: don’t panic. You’ll make dumb decisions, lose money, and be kicking yourself for not listening to me sooner…
…especially if the next day rolls around and you miss out in a double-digit rally like we’re seeing right now.
Catch up on your latest gains with the Tuesday replay of American Institute for Crypto Investors LIVE below: