USDC Hit 88 Cents on a Saturday and I Did Nothing for Three Hours

Eighty-eight cents. That is the number my phone showed at 8:04 on a Saturday mornin' for an asset that is sposed to be a dollar, and my thumb left a smear on the screen cuz I had checked it eleven times in four minutes. March 11, 2023. Kitchen table, one laptop, two kids at their grandparents until Sunday, a Google Sheet open to a tab named Stables with cell B14 glowing at me. B14 held my depeg counter, built at 7:50 that morning in a state I would describe as upright but barely.

The number in B14 mattered because $6,200 of my approximately $15,600 crypto position sat in USDC on Coinbase, the deliberately boring part of the portfolio, tuition-adjacent money. Circle, the issuer, had disclosed the night before that $3.3 billion of its reserves sat at Silicon Valley Bank, a bank that had stopped existing in any functional sense, and the whole stablecoin complex repriced over a weekend. Selling at 88 cents meant locking in a $744 loss on money I had never once treated as at risk. Buying more meant spotting the knife. The spreadsheet was cheaper than either.

what the spreadsheet actually tracked

The Stables tab had four columns: amount, cost basis, current price, and minutes since the 90-cent break. Column four did not exist before that weekend. Under the table, in a cell I typed at 8:10 while the coffee machine ran, sat the one sentence the entire weekend turned on: Circle redeems USDC for dollars at 1:1, per Circle's own documentation. My $6,200 sat in row one at an average basis of $1.0002. The whole weekend was me deciding whether that sentence was still true.

the redemption sentence

That sentence deserves its own paragraph, cuz it was the only floor under the price. Circle's terms let large holders redeem USDC directly for dollars thru Circle itself, wire window and all, which means the token's value ultimately hangs on a bank rail rather than on sentiment. The rail broke Friday when SVB did. What did not break was the legal claim. Every seller at 88 cents that mornin' was selling a dollar claim at a 12 percent discount to anybody still reading terms of service. I read them twice. Then I just sat with the sentence for a while.

DAI at 1.03 and other weirdness

The market's logic that mornin' was beautifully deranged if you watched it long enough: DAI, backed partly by USDC collateral, traded above a dollar at 1.03, which means the market priced Circle's trouble as DAI's strength. Swapping my USDC to DAI meant paying a spread to buy 3 cents of perceived safety. Swapping to USDT meant trusting Tether's reserves instead, an entity I had watched dip to 95 cents in May 2022 after Terra fell and recover inside a week. Every exit had a toll. The cheapest toll was the one thru Monday.

the case for selling at 88

The bear case deserved a real hearing, and I gave it forty minutes with a second coffee. If SVB's $3.3 billion stayed frozen for months, Circle would face redemptions it could not wire, and Coinbase had already disclosed in its own 8-K that $360 million of its cash sat at the same bank. Selling guaranteed $5,456 and a locked loss. Holding risked the tail. The tail's size depended entirely on one sentence in a terms page, so I ruled out selling by 9:15 am and wrote the time in the cell next to B14, because the counter had acquired a sibling.

why my hands stayed still

The honest answer is arithmetic. Selling $6,200 at 88 cents locks $5,456 and a $744 loss in exchange for freedom from a tail I could actually size: worst case, full loss of $6,200, if Circle itself failed, and Circle's asset base was around $43 billion against one frozen slice. Recovery cases in stablecoin land had a recent track record, USDT's 95-cent morning in May 2022 resolving inside a week, and the people who sold that dip funded the people who read terms. I have never once been paid for panic. That Saturday was not gonna be the first time.

Monday, 2:15 p.m.

B14 stopped at 3:11, as in three hours and eleven minutes under 90 cents, from 8:04 am to 11:15 am, after which USDC spent the weekend drifting in the 90-to-92 range and I went outside and raked the yard instead of refreshing. Sunday night the government announced depositors would be made whole, and at 2:15 pm Monday the price printed 0.9997 on my screen while my six-year-old asked for a snack. I closed the laptop and made the snack. The counter cell stayed exactly where it was.

the index card under my monitor

B14 still exists, cuz I do not trust myself to remember a number I felt that hard. The setup changes were slight and permanent: maximum $2,000 in any single stablecoin issuer at any time, the rest split between a second issuer and a Treasury money market fund that pays actual interest, and the redemption sentence printed on an index card taped under my monitor. Total diversification cost: about 40 basis points a year in convenience. The Stables tab still opens at 8:04 each morning for eleven seconds, one glance, no panic. On March 11, 2023 it said 191 minutes. My $6,200 said $6,200 by Monday dinner. That is it. That is the whole weekend.