USDC +11.67% During Market Fluctuations and Changes in Redemption Options
On September 19, 2025,
Throughout the previous week, the stablecoin USDC experienced extraordinary price swings and limited liquidity. A significant event was the issuer's announcement of a temporary halt on token redemptions, citing the need to protect the system as heavy outflows occurred. Although this step aimed to support the token’s stability, it led to swift market responses and cast doubt on USDC’s long-term reliability as a stablecoin.
This decision fits into a wider trend of capital exiting stablecoins, fueled by worries over peg stability and ambiguous regulatory environments. The redemption suspension, though labeled a short-term remedy, has eroded confidence among institutional investors and active traders. Market analysts observed that this pause interfered with arbitrage processes and increased the gap between USDC and other stablecoins, which further amplified price discrepancies.
Technical signals now show a marked divergence between USDC and traditional reference points. The RSI has dropped into oversold levels, indicating a possible brief rebound, but the dominant trend remains downward. Experts suggest that market participants will focus on the restart of redemptions and any further actions from the issuer.
The issuer has also presented initial plans for an updated governance approach, which involves adding a multi-collateral framework to better spread risk and enhance transparency. While these initiatives are still being developed, they signal a strategic shift in response to the recent turmoil. The company reiterated its dedication to maintaining the USD peg and rebuilding trust by improving oversight and liquidity protocols.
Backtest Hypothesis
The backtesting methodology being reviewed aims to pinpoint optimal entry and exit opportunities for USDC based on the relationship between RSI signals and moving average crossovers. This strategy presumes that periods with extreme oversold readings could be followed by short-term price recoveries, especially when liquidity is scarce. The model utilizes a 14-day RSI cut-off at 30 to signal potential buying opportunities, with a 200-period moving average serving as a guide for the prevailing trend.
The performance of this approach is being assessed over different time intervals to determine its strength during both stable and volatile markets. An important factor is the redemption status, which can greatly influence how well the indicators work. The strategy is adaptable, with stop-loss and target parameters adjusted dynamically based on current volatility and liquidity data.
