What Is a Stablecoin Depeg?

February 16, 2026 stablecoins depeg

What happens when a stablecoin loses its $1 peg and why it occurs.

Definition

A depeg happens when a stablecoin trades significantly above or below $1.

Causes

panic selling
liquidity shortage
reserve concerns
regulatory shocks

Example

If price drops to $0.95, it means confidence or liquidity is weak.