How NuBits Lost its Peg; or, how TUSD, the 2018 Tax Rally, and More Killed NuBits; or, the One Stable that Couldn’t
2018 was the year of the stable coin. BTC and alts were out, price stable cryptos were in. That was great for almost all old and new stables alike… except for NuBits.
NuBits is a longstanding stable coin tied to NuShares and pegged to the USD.
It lost its peg once in 2016, but reclaimed it rather quickly. Otherwise it had traded at a stable value of about $1 USD for most of its life span.
I am not 100% on what exactly happened, but I think I know the gist of it from some research and market watching over the years.
The problem of NuShares (an important part of NuBits holding its peg) not trading on the same exchanges as NuBits aside… i think what happened is this:
NuBits was bought up like crazy in the first part of the 2018 bear market. This was at a time when Dai, NuBits, Tether, and dollars were the only real choices for stable currencies (this was before TUSD, USDC, etc).
NuBits in fact was so hot that I was mistaking it for a altcoin on its way to the moon at first glance (meaning the volume and price increase at first glance looked like an altcoin mooning!)
However, right before the tax rally in April 2018, the stable coin TUSD launched on Bittrex.
Bittrex was a major exchange NuBits traded on, and NuBits was one of the only stables on Bittrex until TUSD came along.
Once TUSD came to Bittrex, people began fleeing NuBits to TUSD.
Then, it only got wore when people began fleeing from NuBits and TUSD to BTC and alts in that really epic 2018 tax rally.
The result seems to be that NuBits couldn’t handle the sell off (it lacked the liquidity to absorb all the selling).
So, Nubits loses its peg over TUSD, but then it can’t reclaim it due to the tax rally… and by the time that rally is over, it has lost its peg and people go to TUSD instead of Nubits.
The problem just gets worse from there, especially since this subsequent period was one of the worst for alts, and Nubits from there seemed to be treated like an alt.
In fact, I would be willing to bet that the stable coin algos have been turned off and only the bear market alt bots are turned on for NuBits.
This to me does hint at a path to recovery (those same bots are likely to lift up coins when the bear market ends or randomly), but it does not bode well for the future of NuBits as a stable coin.
To add insult to injury, the NuBits/NuShares team seems to have really cut down on the amount of communication they have done since the summer.
The last social media posts from the team offer glimmers of hope, but then NuBits keeps falling and they go quiet (they still post on the internal forum, but the presence to the outside world isn’t very quiet).
Anyway, those are my theories, maybe I am wrong on the specifics…
…but specifics aside, we can see the basics of what occurred on a chart. And my eyes aren’t wrong in seeing that on a chart Nubits began to lose its peg March 18th (right after TUSD launched on Bittrex) and has by Jan 1st, 2019 now fallen to $0.03.
Losing $0.97 worth of value over the course of 9 months is brutal.
It is such a deep and long decline that calling NuBits “dead” is probably more accurate than discussing how it can reclaim its peg.
That said, as I noted above, the reality is it can in theory reclaim its peg, but, as noted as well, reclaiming trust is another issue… especially with all the new and improved stables that launched in 2018.
So what is the point or the lesson here?
Probably the main lesson here is this:
Not every stable coin has to hold its peg. Some stables have better mechanisms for controlling the price than others, but ultimately as a crypto trader/investor you need to be smart about where you store value. People make fun of some of the new more centralized stables by big companies, but the reality is…. holding a peg is paramount, and there is wisdom in erring toward whatever entity can pull that off.
Is there an opportunity for NuBits? NuBits in my opinion is a moonshot still. Let’s say it ever regains its peg, well… you are now paying $.03 cents on the dollar. It is sort of like buying bad debt for pennies on the dollar. Probably going to be worthless, but if not you potentially get a wicked return. Clearly the market is full of better investments, but as far as high risk moonshots go, it’s on the table… plus, at this point, NuBits still could use the liquidity and I’m sure any buyers are appreciated 🙂
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