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PENGU USDT Sell Alert: Is This a Major Change in Stablecoin Approach?

PENGU USDT Sell Alert: Is This a Major Change in Stablecoin Approach?

Bitget-RWA2025/11/25 16:20
By:Bitget-RWA

- PENGU USDT's 28.5% depegging triggered DeFi liquidations, exposing algorithmic stablecoin fragility. - A $66.6M team wallet withdrawal and opaque reserves amplified trust erosion during the crisis. - Canada and the U.S. are accelerating stablecoin regulations to address governance and transparency gaps. - Experts urge diversified portfolios with auditable reserves as investors shift toward compliant stablecoins.

The latest instability in the stablecoin sector, highlighted by the depegging incident, has compelled both investors and regulators to recognize the inherent weaknesses of algorithmic stablecoins. In the last two weeks, PENGU USDT has dropped 28.5% in value, and setting off a chain reaction of liquidations throughout decentralized finance (DeFi) protocols. While such sell-offs are not rare in the unpredictable crypto market, this episode brings urgent attention to the fundamental vulnerabilities of algorithmic models and their broader impact on stablecoin strategies.

The Depegging Crisis: A Systemic Wake-Up Call

PENGU USDT’s failure to maintain its dollar peg was not an isolated event, but rather a sign of deeper systemic issues.

, the token’s depegging at the end of October 2025 was intensified by a $66.6 million withdrawal from wallets managed by the team, sparking rumors of insider activity and damaging confidence. This situation revealed the unstable foundation of algorithmic stablecoins, which often depend on high-yield incentives and lack clear collateral backing. , the absence of transparent reserves—unlike established stablecoins such as or USDT—left the project unable to withstand liquidity crises.

The consequences were widespread.

within a single week in November 2025, heightening concerns about contagion within the DeFi space. This has led to renewed scrutiny of risk controls, with experts advising investors to favor stablecoins that offer transparent reserves and robust institutional protections.

Regulators have also taken note of the PENGU USDT sell-off. In Canada, new regulations for stablecoins are being expedited to address issues of governance and transparency, while the U.S. GENIUS Act is redefining the legal framework for algorithmic models. These actions reflect a growing agreement that the era of opaque, unregulated stablecoins is drawing to a close.

From a market perspective, PENGU USDT’s price movement remains troubling. Although there was a brief 12.8% recovery following Bitcoin’s 4.3% rebound and $202 million in trading activity,

significant resistance points. Analysts caution that if it fails to hold above the $0.023 support level, a prolonged decline could follow. This ongoing volatility has prompted investors to shift funds toward regulated stablecoins and asset-backed tokens, such as those linked to gold.

PENGU USDT Sell Alert: Is This a Major Change in Stablecoin Approach? image 0

The Road Ahead: Diversification and Risk Mitigation

The turmoil surrounding PENGU USDT stands as a warning about the dangers of algorithmic innovation without adequate protections.

, this event demonstrates the importance of multi-signature security, on-chain transparency, and diversified holdings to avoid excessive risk from any single stablecoin issuer. For institutional investors, the takeaway is unmistakable: in the aftermath of depegging events, liquidity and openness are essential.

Retail participants, on the other hand, face a more nuanced situation. While the immediate losses from PENGU USDT’s fall are clear, the broader market may still evolve. The rise of hybrid stablecoins—which blend algorithmic features with tangible collateral—could strike a balance between innovation and reliability. Still, until regulations and industry standards catch up, the dangers of algorithmic stablecoins are likely to outweigh their potential benefits.

Conclusion

The PENGU USDT sell-off is more than just a technical event; it marks a pivotal moment for the stablecoin industry. As authorities increase oversight and investors seek greater clarity, the period of algorithmic stablecoins operating without clear rules is coming to an end. Moving forward, the sector must reassess risk, rethink governance, and recommit to the core values of trust and liquidity. For now, the message from the market is unmistakable: in the realm of stablecoins, stability must be deliberately designed and maintained—it cannot be taken for granted.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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