Executive Summary
PSI slid from 91.9 to a record 85.6 over nine days. BEDROCK cracked into STEADY. The Bank Run Gauge hit negative 43.2. Small-cap liquidity is being gutted while USDT mints into the void.
The Peg Stability Index opened the week at 91.9 and never looked back, sliding to 85.6 by Sunday, a record low across 25 days of tracking. What began as a BEDROCK regime on March 15 cracked into STEADY by March 21, the week's sole grade transition. The Bank Run Gauge told the same story in starker terms, swinging from 11.4 early in the week to negative 43.2 on March 21. This was not a single-day shock. It was a controlled descent with nobody at the controls.
The dominant thread was a systematic drainage of confidence beneath a stable headline number. Total market cap barely moved, ending at $325.21B versus $325.71B at the open, a 0.15% haircut. But underneath, the plumbing was seizing. DEWS ALERT count went from 0 to 8 overnight on March 17, then climbed to 10 by March 20, and by March 23 the system had logged its first WARNING-band coin. 119 depeg events and 160 blacklist actions in a single week suggest the automated defenses are working overtime while the organic stability erodes.
The counter-narrative was USDT, which minted $860.80M on March 20 alone, 5x its weekly pace, even as PSI sank to 90. That same day USDC bled $75.36M, a divergence that speaks to flight-to-familiarity rather than flight-to-quality. Meanwhile, the small-cap carnage was vivid: USDO lost 99.6% of its DEX liquidity on March 21, USDA shed 75% of its liquidity on March 22, and KAU resolved 3 depegs only to depeg again the same day. U lost 88% of its DEX liquidity on March 18. The long tail of stablecoins is being quietly gutted.
Capital flows told a story of synchronized reversal. March 15's "Triple Reversal Day" saw USDC, USDT, and USDe all flip their weekly flow direction simultaneously. By March 19, USDS, USDC, DAI, and PYUSD had all reversed weekly inflows on the same day. Then on March 23, even USDS unwound a $625M weekly inflow. USTT's $1.78B single-day add on March 17 looks less like growth and more like musical chairs.
The structural read is uncomfortable. PSI has now declined for 9 consecutive days. The BEDROCK regime held for 6 of those days before giving way, which means the band labels are lagging the deterioration visible in liquidity and depeg frequency. When the index is setting records, the floor is not found. It is still being searched for.