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What Is the Risk of a “Fire Sale” of Reserve Assets during a Stablecoin Run?

Forced, rapid selling of illiquid reserves at a deep discount to meet redemptions, which depletes the reserve value and accelerates the depeg.
Greeks.Live22.11.25

What Is the Risk of a “Fire Sale” of Reserve Assets during a Stablecoin Run?

A "fire sale" is the forced, rapid liquidation of reserve assets at deeply discounted prices to meet mass redemption demands during a bank run. This risk arises when a stablecoin's reserves are illiquid.

The rapid selling drives the price of the reserve assets down, meaning the issuer receives less than the book value. This loss further depletes the reserve pool, potentially causing the total reserve value to fall below the stablecoin's market capitalization, thereby confirming the depeg and accelerating the run.

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