The world’s leading stablecoin Tether (USDT) sees massive liquidation pressure as the broad crypto market space sustains a crash. The token lost 4.6% to hit 0.9508, the lowest mark since the crypto turmoil of 2017.
The USDT decline remains highly uncharacteristic as the token should keep a 1:1 tied against the United States dollar. Market players remain concerned about Tether de-pegging after Terra’s USD dramatically surrendered its dollar tie this week.
The cryptocurrency has seen massive consolidation over the past seven days, with the cumulative market cap losing around $900 billion. Tether (USDT) is the world’s largest stablecoin, ranking 3rd in the crypto list with a market cap of $81.8B.
Why is Tether De-Pegging?
The ongoing market crash seems to send investors out of the marketplace. As investors use USDT to facilitate cryptocurrency trades, they are likely to sell the stablecoin for dollars, to reduce crypto exposure amid colossal declines.
Also, traders seem to purchase Tether’s peers USD Coin and Binance USD, showing some positioning against USDT. USDC and BUSD gained 0.3% and 1.6%, respectively.
Tether founder Paolo Ardoino revealed honoring $300M redemptions to US dollars over the last 24 hours to uplift investors’ faith.
USDT’s Reserves Veiled in Uncertainty
Bitfinex, the cryptocurrency exchange that runs Tether, claims to have an enormous reserve pool to back USDT value. According to the organization’s data, about 84% of the mentioned pool comprises cash & cash equivalents.
However, the community criticized the organization for not ensuring adequate transparency about its reserves. Also, uncertainty over Bitfinex’s capability to back USDT amid intensified pressure contributed to the latest sell-down.
UST’s crash had investors losing confidence in stablecoins. That also contributed to the Tether crash. Financial regulators in the United States, including Treasury Janet Yellen, used TerraUSD’s latest slump to criticize the stablecoin market.
Meanwhile, the crypto market extended its aggressive declines today. While publishing this blog, the global cryptocurrency market capitalization stood at $1.19 trillion, losing 14.82% on the day.
That reflects the dominant bearish wave in the crypto world. Also, BTC dropped 11.28% within the previous 24 hours, exploring $27,925 at this publication.
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