This article documents historical episodes and a measurement problem. It predicts nothing about any specific stablecoin. Nothing here is investment advice. Decisions are yours.
A depeg is a stablecoin trading away from its fixed value, and because stables are the quote asset for most of the market, a depeg is never one asset's problem: every pair priced in the broken stable prints a phantom move at once, contaminating every chart, backtest, and board built on those pairs.
How pegs break, by design
Each stablecoin design fails along its own axis. Fiat-backed stables break on reserve doubt: the token is a redemption claim, so news that the reserves are impaired, or merely unreachable for a weekend, reprices the claim below par. Crypto-collateralized stables break on collateral crashes, when the assets backing the peg fall faster than liquidations can defend it. Algorithmic stables break reflexively: their pegs rest on arbitrage against a sister asset, so doubt about the system prints sell pressure that the system answers by diluting the sister asset, which deepens the doubt. The direction is self-reinforcing in a way the other designs' failures are not, which is why the algorithmic failure was the total one.
The two canonical episodes
May 2022: the largest algorithmic stable lost its dollar peg, and the mint-burn machinery that should have defended it instead hyperinflated the sister token toward zero, erasing roughly forty billion dollars of combined value inside a week and dragging the whole market into forced deleveraging: one of the entries in the crypto graveyard that a survivor-only dataset quietly forgets. March 2023: the second-largest fiat-backed stable disclosed that part of its cash reserves sat at a bank that had just failed, and the token spent a weekend below ninety cents while redemptions were frozen, snapping back once regulators guaranteed the deposits. The pairing is the whole lesson: one depeg was terminal because the design was reflexive, the other transient because the claim was real and merely delayed. Depegs are not one phenomenon; reading which kind is underway is the difference between a buying opportunity and a funeral.
Every chart at once
Now the measurement problem this site cares about most. Most liquid crypto pairs, including every pair our universe rules admit, are quoted in a stablecoin. Price is a ratio, asset over quote, so when the quote asset falls five percent, every chart priced in it prints a five percent rally that no one earned: mechanical, marketwide, and indistinguishable on a single chart from real strength. During the March 2023 weekend, dollar-quoted and stable-quoted versions of the same assets diverged by the size of the depeg, and anything computed from the stable-quoted series inherited the distortion: momentum readings, breakout triggers, and every backtest that later treated those bars as ordinary. A board like ours is not exempt, and pretending otherwise would break the rule behind publishing our formulas in the first place: our monitor's prices are stable-quoted, so a major depeg would move every number on the board simultaneously. The honest handling is disclosure plus cross-checking against dollar-quoted references during stress, not a claim of immunity.
The defensive readings
Three habits convert depeg risk from ambush into telemetry. Watch the peg itself as a stress gauge: a stable trading a fraction of a percent below par on real volume is the market pricing a probability, and it is among the most honest fear metrics that exist because holding the discount costs real money. Watch the flight paths: during doubt about one stable, capital rotates into its rivals, and the premium on the destination stable measures the panic as cleanly as the discount on the source. And segment your own exposure: the cash leg of a systematic book, where a risk-off reading parks capital, is itself a position in a specific instrument with a specific failure mode, so concentration there feeds the same ruin arithmetic as concentration anywhere else. A depeg is the one crypto crash that reaches even the people who thought they were standing aside. Knowing which kind you are watching, and which token your safety is denominated in, is the entire defense. Decisions are yours.