A Comparative Analysis of Market Reactions to Stablecoin Peg Deviations

Yue Gu () and Peiyi Wen
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Yue Gu: University of Wisconsin-Eau Claire, College of Business
Peiyi Wen: The University of New South Wales, College of Business

A chapter in Proceedings of the 2025 International Conference on Hybrid Commerce, Human Capital, and Economic Dynamics (ICHCH 2025), 2026, pp 691-698 from Springer

Abstract: Abstract Stablecoin have become a critical component in the digital financial ecosystem; it is a medium of exchange, a store of value, and a bridge between traditional finance and decentralized finance. However, its stability has been repeatedly challenged in real-world events. This article uses the event study method to explore how stablecoin de-pegging affects the market and how the market responds. This article selects representative de-pegging events of United States Stable Terra (UST), United States Dollar Coin (USDC), and United States Dollar Tether (USDT), and analyzes the reaction of related crypto assets before and after the events. The result of the research shows that, compared with fiat collateralized stablecoins, the algorithmic stablecoins are more likely to cause severe market volatility. Meanwhile, this study also observed significant cross-currency spillover effects, which indicate that stablecoin risks have systematic transmission characteristics. The results of this study emphasize the significant importance of enhancing the transparency of the reserve mechanism, strengthen the support of real assets, and the timeliness of regulatory intervention for maintaining the stability of digital finance.

Keywords: Stablecoin; Peg Deviations; Asset (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-2-38476-585-0_78

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