NBER Study Warns of High Run Risk in Tether and USDC
A new National Bureau of Economic Research (NBER) study highlights significant run risk in leading stablecoins, estimating an annual run probability of 3.9% for Tether (USDT) and 3.3% for USDC. This “stablecoin run risk” is nearly 4,000 times higher than for FDIC-insured bank accounts. The research reveals a paradox: stablecoins that depend on many centralized arbitrageurs to maintain their dollar peg are more prone to mass withdrawals during crises, as investors may rush to exit. By contrast, coins with fewer but larger arbitrageurs can better protect reserves under stress. As lawmakers debate stablecoin legislation, the study calls for robust regulatory frameworks to address these design vulnerabilities and strengthen market stability.
Bearish
The study’s findings undermine confidence in the stability of major stablecoins. High "stablecoin run risk" suggests that in times of stress traders may rush to exit, draining liquidity and exacerbating market volatility. In the short term, this could trigger price swings across crypto markets as leverage unwinds and margin calls intensify. Historically, events like the TerraUSD collapse showed how loss of confidence can ripple through DeFi and spot markets. Long term, persistent design flaws and regulatory uncertainty may curb institutional adoption and slow overall crypto growth. Consequently, the report’s warning points to a bearish outlook, pressing traders to reassess stablecoin exposure and manage risk more conservatively.