Bitcoin News Today: Stream's $93M Loss Highlights Risks of Algo Stablecoin Dependency

Stream Finance has suspended all deposits and withdrawals following a reported $93 million loss tied to an external fund manager, according to a Phemex report. The firm has initiated an investigation led by Perkins Coie LLP partners Keith Miller and Joseph Cutler to determine the cause of the shortfall. The suspension, announced on November 4, comes as the platform's staked stablecoin, Stream USD (XUSD), depegged by 23%, trading at $0.938 as of press time, as noted in a Phemex depeg report.

The depegging of XUSD, a yield-seeking stablecoin designed to maintain a $1 value, was first highlighted by PeckShieldAlert. The token's sharp decline has raised concerns among investors about the stability of algorithmic stablecoins, a category already scrutinized after the 2022 collapse of TerraUSD (UST). Stream Finance's move to halt liquidity operations mirrors broader crypto market volatility, including a recent $100 million exploit at decentralized exchange Balancer, as detailed in a TradingView article.

The firm's troubles are compounded by a broader selloff in crypto assets. Bitcoin (BTC) investment funds alone saw $946 million in outflows last week, with U.S.-listed Bitcoin ETFs leading the retreat following Federal Reserve Chair Jerome Powell's remarks that rate cuts this year were "not a foregone conclusion," according to a crypto.news report. While Solana (SOL) and Ethereum (ETH) attracted some inflows, the overall market sentiment remains bearish, with investors rotating capital toward perceived safer assets.

Stream Finance's announcement also follows a string of challenges in the stablecoin sector. Standard Money, developer of BNB Chain-based USDsd, recently raised $8 million to expand its mainnet rollout, but the sector remains under pressure after repeated peg failures and regulatory scrutiny. The firm's XUSD depegging has drawn comparisons to similar incidents involving TerraUSD and other algorithmic stablecoins, which rely on economic incentives and smart contracts to maintain their value.

The company has pledged to provide regular updates as it works to restore stability, but the incident underscores the fragility of crypto platforms dependent on third-party fund managers and algorithmic mechanisms. With XUSD trading below par and withdrawals frozen, investors are left to navigate a rapidly shifting landscape marked by systemic risks and regulatory uncertainty.