What causes a stablecoin pair to trade at 0.998 instead of 1.000

05 September 2026

A stablecoin pair trades below 1.000 because supply and demand for each coin are not perfectly matched at that moment. The price deviates when more people want to sell one stablecoin for the other, or when the cost of moving the coins between exchanges creates a permanent gap.

Stablecoins are not truly stable. Each one has its own issuer, its own backing mechanism, and its own liquidity pools. When you trade USDT for USDC, you are exchanging two different claims on two different reserves. The market prices them relative to each other based on what traders believe those claims are worth right now.

The most common reason for a 0.998 price is a temporary imbalance. Say a large holder needs to convert USDC into USDT quickly. They place a sell order slightly below the peg to ensure it fills. Other sellers see the move and follow. The order book fills with sell pressure until buyers step in at the lower price. The pair trades at 0.998 until the imbalance clears.

Another cause is network congestion or withdrawal delays. If USDC on Ethereum is slow to move to an exchange where it can be sold, the available supply on that exchange shrinks. Meanwhile USDT might arrive faster from Tron. The price adjusts to reflect which coin is easier to use right now.

Arbitrage should in theory pull the price back to 1.000. A trader can buy the cheaper stablecoin and sell the more expensive one, profiting from the gap. But arbitrage has costs. You must pay network fees to move coins. You must wait for confirmations. You must account for slippage on both sides. If the gap is 0.2 percent and the total cost to execute is 0.15 percent, arbitrage still happens. If the cost is 0.25 percent, the gap persists.

Different blockchains add another layer. A stablecoin on Ethereum is not the same asset as the same brand on BNB Chain. Bridging them costs time and money. The price of USDT on Ethereum versus USDT on Polygon can drift because moving between chains is not instantaneous. The hub page "Swapping into and out of stablecoins" explains these cross-chain mechanics in detail.

Liquidity depth matters too. On a thin order book, a single moderate trade can move the price by several tenths of a percent. On a deep book with millions of dollars on each side, the same trade barely registers. Pairs with low trading volume trade further from 1.000 more often.

Redemption risk is a subtler factor. If traders suspect that one stablecoin's issuer cannot honor redemptions at face value, they sell it. The price falls. This happened with USDT during market stress in 2022 and with USDC when Silicon Valley Bank failed. The discount reflected doubt, not a technical glitch.

Finally, the market price is a snapshot of the last trade. If no one has traded a stablecoin pair in hours, the displayed price might be stale. The next trade could come in at 0.998 or 1.002 depending on who shows up first.

None of these deviations mean the system is broken. They mean the system is a market. Stablecoins are not dollars. They are tokens that aim to be worth one dollar. Markets continuously test that aim. A 0.998 price is simply the market's best guess at the exchange rate between two different financial instruments at that second.

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