Pax Dollar Panic: The Three-Hour Surge That Shook the Crypto World

YEREVAN (CoinChapter.com) — In a startling twist for crypto enthusiasts, the Pax Dollar (USDP) stablecoin momentarily broke away from its $1 peg, escalating to $1.29 on April 16. This sudden increase, then quickly returned to $1 in just three hours, shows how sensitive and active crypto pricing can be.

Pax Dollar Depeg Culprit? Pricing Aggregators

According to a Paxos spokesperson, the root of this volatility wasn’t a flaw in the coin’s protocol. Instead, it emerged from the data feeds of pricing aggregators, which compile price data from various trading venues.

On that fateful day, a few trading platforms witnessed sharp price spikes, which misleadingly inflated USDP’s price on aggregators. “These platforms pull pricing data from trading venues,” the spokesperson explained, emphasizing that Paxos does not influence market activities on these platforms.

Impact and Insights

This unusual price change happened at the same time USDP’s market value briefly rose from $140 million to $181 million as the coin reached its highest price. It later stabilized, dropping back to $140 million when the coin returned to its pegged value. Currently, USDP’s market cap hovers around $134 million.

During this upheaval, traders on different platforms experienced turbulence. An anonymous trader faced a staggering $529,000 liquidation of Circle’s USD Coin on April 16, the day USDP surged to $1.18, highlighting the risks involved in volatile trading scenarios.

Trading Advice from the Experts

Paxos urges traders to examine closely the order book before placing significant orders, especially for stablecoins. “Particularly for stablecoins, users should make sure they use limit orders,” advised a Paxos spokesperson. This strategy can thus protect against unexpected market changes and ensure trades close at desired prices.

The recent event underscores the necessity for vigilant trading practices. It serves as a crucial reminder for traders to employ strategies that align with real-time market conditions, ensuring they stay informed and prepared for sudden market movements. Pax Dollar’s journey through this pricing hiccup offers a compelling glimpse into the nuanced challenges of maintaining stability in the volatile world of cryptocurrency.