USDC (USD Coin) is a **stablecoin** pegged to the value of the US dollar (1 USDC = 1 USD). It is issued by licensed financial institutions (such as Circle and Coinbase) and backed by reserve assets like cash and government bonds.
### **Can the price of USDC drop?**
Yes, theoretically, **the price of USDC** could drop below 1 dollar, but this is rare and occurs in specific cases, such as:
1. **Loss of confidence**:
- If investors doubt the issuer's ability to redeem the reserve assets, they might sell USDC at a lower price (example: 0.98 dollars).
- This happened temporarily during the **Silicon Valley Bank crisis (March 2023)** when Circle announced that part of its reserves were held at the bank, causing the price of USDC to drop to ~0.97 dollars before recovering.
2. **Technical or liquidity issues**:
- If trading platforms malfunction or there are difficulties converting USDC to dollars, the price may temporarily drop.
3. **Government oversight**:
- Any legal action against the USDC issuer (such as asset freezes) could affect investor confidence.
4. **Cyber attacks or smart contract errors**:
- A smart contract hack of USDC or errors in the code could cause disruptions.
