USDE -5.00% in 24 Hours Amid Market Volatility

On OCT 5 2025, USDE dropped by 5% within 24 hours to reach $1.0005, USDE dropped by 6.99% within 7 days, dropped by 6.99% within 1 month, and dropped by 4% within 1 year.

The sudden depreciation of USDE in the last 24 hours has triggered renewed scrutiny of its stability mechanisms and reserve composition. Despite maintaining a nominal peg to the U.S. dollar, the basket of underlying assets backing USDE has come under pressure from shifting market conditions. Recent liquidity strains in the stablecoin market have amplified concerns about redemption risk and asset diversification, leading to increased redemptions and reduced confidence in the token’s intrinsic value.

Technical indicators suggest a continuation of downward momentum, with USDE breaking below key support levels observed in the past month. The relative strength index (RSI) currently hovers near oversold territory at 27, signaling potential for a short-term rebound. However, the 50-day and 200-day moving averages remain in a bearish alignment, reinforcing the possibility of further depreciation unless significant intervention or structural adjustments occur.

Backtest Hypothesis

A proposed backtesting strategy aims to evaluate the efficacy of a mean-reversion approach to USDE trading, based on a 14-day RSI indicator and a 50-day moving average crossover. The strategy would go long when the RSI falls below 30 and the price crosses above the 50-day MA, and go short when the RSI exceeds 70 and the price crosses below the 50-day MA. The hypothesis assumes that USDE’s volatility is bounded by its dollar peg and that deviations are temporary, thus making mean reversion a viable strategy.

This framework would be tested over a 12-month period using historical data, with transaction costs and slippage factored into performance metrics. The primary outcome variables would be annualized return, maximum drawdown, and Sharpe ratio. If the strategy demonstrates a Sharpe ratio above 1 and a positive annual return, it would suggest the strategy is viable under current market conditions. The hypothesis also posits that the strategy will perform better in environments where USDE’s deviation from $1 remains within a 5% band, as seen historically.