Huobi Linked Stablecoin HUSD De-Pegs: Plunges to $0.85 – What Happened?
The stablecoin of crypto exchange platform Huobi briefly de-pegged from the US dollar due to liquidity problems. This sent shockwaves through the crypto market. JUST IN: Huobi exchange stablecoin $HUSD has de-pegged from the US dollar and is trading at $0.85. But what caused this dramatic event, and what does it mean for investors?
HUSD De-Pegs, Falls Below $1
Stablecoin connected to Huobi falls to $0.85. Aug. The once popular HUSD stablecoin has fallen dramatically from its $1 peg. It lost peg on Aug. 18, falling to around $0.82, according to data CoinGecko . dropping to a low of $0.34 after crypto exchange Huobi announced that it delisted the asset. The stablecoin, HUSD, dipped to as low as $0.87, raising concerns about its stability and the potential for wider market impact.
Huobi's Response and Liquidity Issues
After recovering the HUSD stablecoin’s dollar peg, crypto exchange Huobi explained what had caused the short-term liquidity problem and assured users that it had been working to address the situation. Despite its now-terminated association with the stablecoin, Huobi has promised to help address HUSD’s liquidity issues and ensure users are not adversely affected.
HUSD Attempts to Maintain Parity
Huobi stablecoin (HUSD) is set to maintain parity with the US dollar. However, by that time HUSD had recovered somewhat, highlighting the volatile nature of stablecoins during periods of market stress.
Context: Acala's aUSD De-Peg
Right before the HUSD de-peg, Polkadot-based decentralized finance platform Acala’s stablecoin, aUSD shed 99% of its value. The de-pegging occurred after...This underscores the importance of understanding the underlying mechanisms and risks associated with different stablecoins.
What Investors Should Know About the Huobi HUSD De-Peg
The HUSD de-pegging event serves as a reminder of the potential risks associated with stablecoins and the importance of conducting thorough research before investing. Monitoring the situation and staying informed about Huobi's efforts to restore and maintain HUSD's peg is crucial for investors holding this stablecoin. The drop to $0.85 for the HUSD stablecoin linked to Huobi highlights the inherent vulnerabilities even in assets designed to maintain a stable value.