USDC -10.23% Attributed to Technical Signal Discrepancies and Liquidity Constraints

On September 23, 2025,

USDC’s latest price action has highlighted heightened volatility, with a steep drop in value in the most recent day following a major upswing the week prior. This swift turnaround has caught the eye of traders and market observers, especially because of the notable differences between short-term and long-term technical readings. The abrupt decline occurred amidst mixed signals from major momentum and trend indicators, pointing to potential weakness in the asset’s liquidity framework.

Key technical metrics, such as the 50-period and 200-period moving averages, have shown significant divergence in recent trading sessions. The 50-period average has dipped below the 200-period, signaling a possible bearish shift. At the same time, the RSI remains in the overbought range, indicating the recent price surge may lack strong underlying buying interest. These conflicting bearish and ambiguous indicators have increased uncertainty among investors, triggering a sharp price correction.

Furthermore, liquidity constraints seem to be intensifying the asset’s price fluctuations. A broader bid-ask spread, together with inconsistent order flows, has made USDC increasingly vulnerable to abrupt price swings. Market analysts suggest that unless these conditions change, further downward pressure may be likely in the short term, especially if trading volumes do not support potential bullish recoveries.

Backtesting Approach

In light of the present divergence in technical signals and liquidity factors, a backtesting framework has been suggested to simulate possible future price developments. This method involves combining moving average crossover strategies with volume-weighted average price (VWAP) analysis to pinpoint optimal entry and exit points. The intent is to catch changes in momentum while minimizing false signals during high volatility.

This approach is built on the assumption that when the 50-period moving average drops beneath the 200-period (commonly referred to as a death cross) and VWAP displays negative divergence, it may indicate sustained downward momentum. The strategy uses stop-loss and take-profit triggers based on recent volatility data, closing trades when either threshold is reached. The goal of the backtest is to evaluate the effectiveness of this strategy under historical market conditions resembling those seen currently.