Recently, the crypto assets market has seen a striking phenomenon: the deposit interest rate of USDC has suddenly surged to an abnormally high level. This phenomenon has attracted the attention of many investors, but there may be hidden risks behind it.

First, we need to examine the nature of this abnormally high interest rate. Normally, the interest rates of stablecoins are closely related to the market cost of funds. However, the high interest rate of USDC seems to deviate from this logic. It is neither a natural result of a shortage of market liquidity, nor have other stablecoins followed suit in raising their interest rates. This unique phenomenon of high interest rates is likely a bait set by certain institutions to quickly cash out, aiming to attract retail investors to take over, while they secretly sell off their positions.

Secondly, we need to delve into the fundamental reasons why institutions may choose to liquidate. The core value of stablecoins lies in the credibility of their reserve assets. Although Circle, the issuer of USDC, has consistently emphasized the transparency of its reserves, there are circulating doubts in the market regarding the composition of its reserve assets. Rumors suggest that USDC's reserves may contain a significant amount of low liquidity assets, such as non-standardized bonds or complex financial derivatives. If large institutional investors discover issues with the reserve assets or face risks of depreciation, they are likely to quickly take action to withdraw.

It is worth noting that on-chain data seems to confirm this speculation. Recently, large USDC transfers have occurred frequently, while the balances of major holding addresses have continued to decline. At the same time, some professional arbitrage institutions have accelerated the loss of market liquidity through cross-platform arbitrage operations.

Looking back at history, it is not difficult to find that similar crises have occurred in the stablecoin market. The collapse of UST in 2022 is a typical case. At that time, UST attracted investors with a high interest rate of 20%, but ultimately evolved into a disaster. This lesson reminds us that in the Crypto Assets market, abnormally high returns are often accompanied by huge risks.

In summary, the current phenomenon of high interest rates for USDC deserves investors' high vigilance. It may be a signal of significant changes about to occur in the market, or it could be a carefully designed exit strategy by certain institutions. For ordinary investors, it is crucial to remain rational and cautious when faced with attractive high interest rates. Before making any investment decisions, gaining a deep understanding of market dynamics, assessing potential risks, and maintaining a moderate investment scale are all wise moves.