Another stablecoin, MIM, depegs from the dollar
MIM, a stablecoin pegged to the USD, dropped from its dollar peg in the last hour. This was seen from CMC data on June 18. The stablecoin is currently priced at $0.9702 at the time of filing this report.
An update from an investor, Jess, seen on Coinmarketcap says,
“There have been reports that (Magic Internet Money) may be nearly insolvent. If you’re holding MIM consider doing your own DD and treading carefully.“
Drops Below The Dollar Peg
A look at the daily chart shows that MIM dropped below its dollar peg at 2.40 AM Paris time on June 18. It dropped further to $0.9612 at 3.25 AM. The price seemed to bounce higher as the market maker tried to stabilize and repeg it to the USD.
It rose to $0.9746 at 4.10 AM, but plunged to $0.9264 just 55 minutes later. It stayed nearly at this range until at 7,25 AM, when the stable coin was pumped again to $0.975. It was evident that the market maker was trying to re-stabilize the coin and peg it back to the dollar.
High Volume Pump
To accomplish this, the stablecoin volume rose from 77 million at 7.25 AM to $100.7 million, when the price was pumped to $0.9755 at 8.45 AM. At 9.05, it became obvious that the repeg action had failed when MIM fell 5.4% to $0.9225 in seconds. 25 minutes later, it fell to its lowest value of $0.9089. This was at 10.00AM, Since then, the stablecoin has not recovered its peg to the USD.
MIM is not the first stablecoin to lose its peg to the USD. Terra USD, known as UST, lost its peg to the USD a few weeks ago. In a ripple effect, another company, Three Arrow Capital (3AC) announced that it was affected by the loss of the dollar peg of the UST.
Lenders in Trouble
While reacting to these events, a market analyst, DEgen Trading said:
“The lenders are in trouble from themselves, 3ac and other levered clients. We will continue to face collateral liquidations in a downward spiral of endless selling.”
He highlighted that the liquidation of affected companies is just a matter of time.
“I touched upon the lending business model. Essentially every other lender is capitalized at 5-10% equity to asset base. 3AC’s fall out is just the first to come. There will be many more defaults. As long as one lender comes into distress” he said.
About Magic Internet Money
An update on CMC says that Magic Internet Money (MIM) is available at Uniswap (V3), Bitfinex, Hoo, PancakeSwap (V2), and Gemini. It also shows that the stablecoin is associated with a scheme that enables investors to “deposit Interest-Bearing Assets on abracadabra.money, and use those as collateral to borrow the stable coin MIM. ”
MIM is currently ranked 2775, based on its market cap of $1.9 billion. Its 24 hour trading volume is $82 billion. This is 308% higher than the previous day, indicating that investors are seeking to exit their positions.