USDE -14.99% in 24 Hours Amid Liquidity and Redemption Pressure

On SEP 25 2025, USDE dropped by 14.99% within 24 hours to reach $0.9992. Over the past week, the stablecoin lost 13.99% of its value, while it has depreciated 15.99% in the last month and the same percentage over the last year. The recent decline marks a sharp deviation from its dollar-peg, indicating potential liquidity constraints and redemptions pressures within the underlying collateral framework.

The depegging follows a surge in redemptions, as users began to liquidate their holdings amid concerns about the fund’s asset composition and reserve transparency. The token, which is designed to maintain a 1:1 value with the US dollar through a basket of assets, has seen significant outflows, compounding its decline. The movement has not been accompanied by a corresponding increase in market volatility or speculative trading, as the broader market remains relatively stable. Instead, the drop appears to be rooted in structural challenges within the redemption mechanism and asset backing.

Technical indicators suggest a potential continuation of downward momentum. The 20-day and 50-day moving averages are both in a bearish crossover, with the short-term average falling below the long-term average. Furthermore, the RSI reading of 28 indicates an oversold condition, though the lack of immediate buying pressure suggests that the market remains cautious. These signals, while indicative of short-term bearish sentiment, do not confirm a long-term trend reversal.

The stablecoin’s performance has sparked renewed interest in the collateral structure and governance model of algorithmic stablecoins. Unlike traditional stablecoins that maintain dollar-backed reserves, USDE’s approach relies on a multi-asset reserve model designed to provide flexibility. However, the recent redemptions have exposed vulnerabilities in the redemption process, particularly under high-velocity liquidity demands. Analysts project that the fund may need to reassess its redemption thresholds and asset allocation strategy to restore confidence and stabilize the peg.

Backtest Hypothesis

To evaluate potential responses to the recent depegging, a backtesting strategy was developed, focusing on the use of moving averages and RSI levels to identify entry and exit points for stabilization mechanisms. The strategy involved deploying a buy signal when the RSI dropped below 30, paired with a short-term moving average crossing below the long-term average, as a trigger to inject liquidity or stabilize the price. Conversely, a sell signal was set when the RSI exceeded 70, indicating overbought conditions and potential exhaustion of the upward trend. The goal of the backtest was to simulate whether such a strategy could have mitigated the recent depegging and supported the token’s return toward its intended peg.