Series: The Truth About Cryptocurrencies – Episode 23 Episode 23 of the series “The Truth About Cryptocurrencies” focuses on: “When They Break: Why Algorithmic Stablecoins Go to Zero.” Algorithmic stablecoins aim to maintain a $1 price peg solely through mathematical formulas and market incentives, without any backing by real-world assets such as fiat currency. However, their very structure contains a critical vulnerability. On July 20, 2026, the sharp declines in Bitcoin and Ethereum, the resulting 15% drop in total value locked (TVL) across DeFi platforms, and the near-total collapse of Balance Coin—losing 99% of its value—symbolized a harsh reality: once algorithmic stablecoins lose trust, they enter a “death spiral” from which, theoretically, there is no recovery to zero. In contrast, traditional asset-backed stablecoins (such as USDC and USDT) are supported by tangible assets like cash or government bonds, providing a buffer even during surges in redemption requests. Algorithmic stablecoins, however, are trapped in an infinite negative feedback loop: the more they are sold, the more their issuer’s value declines; and the more their value declines, the more they are sold. This fundamental difference was again demonstrated by the collapse of UST and the recent Balance Coin incident. Regulatory authorities are now paying increasingly close attention to algorithmic stablecoins, raising serious questions about their structural viability. As regulatory scrutiny intensifies and market volatility continues to rise, the risks of new entrants failing and capital flight from existing projects will become even more apparent. Investors must focus on this structural inevitability—the defining difference between algorithmic and asset-backed stablecoins—when evaluating why these tokens can—and often do—fall to zero. #markets #investing ※Investing involves risk. Please make all final decisions at your own responsibility.