Panic vs stablecoins – did USDT just lose its peg to the dollar?Admin
There is no doubt that the collapse of the UST stablecoin will leave an indelible mark on the cryptocurrency industry. But also on the future of this digital stability market, which has been booming since last year. With consequences as fast as a flash crash can bring down this entire ecosystem in a single night. And to the point of triggering real panic movements, fueled by investors under very high tension. The latest example being a supposed loss of the stablecoin Tether USDT’s peg to the dollar.
Is it the panic that triggers the fall, or the fall that triggers the panic? A difficult question, at the center of the news of the cryptocurrency sector. With the main origin, the sudden and violent collapse of the UST stablecoin. The latter, however, positioned as the third main player in this market, and the first in a decentralized form. But obviously, this will not have been enough to enable him to resist the attack of which he has just been the victim. Because it is still well below $1 ($0.62 at the time of writing this article).
An unprecedented situation in a market that is accustomed to instability. With the consequence, a real state of shock close to the bear out among the ranks of haggard investors. Because a gaping flaw has just been opened in the confidence that it was possible to grant to this numerical stability, very useful to secure your funds in times of crisis. And to make matters worse, we must add to all this a new fall in Bitcoin, this time below $28,000. While at the same time, some are crying out for a USDT meltdown In progress.
USDT – Loss of its peg to the dollar?
The information is spreading like wildfire on the networks. The USDT stablecoin would in turn be losing its peg to the dollar. A situation fueled by the price chart of this digital stability market leader on the FTX platform. And looking at it (too) closely, it is true that it can be scary. Especially considering the trauma of UST still on everyone’s minds, and many wallets.
In effect, USDT price fell just a few hours ago below $0.95. That is a reduction of 5%, certainly negligible, compared to the rest of the cryptocurrency market. But definitely more worrying when it comes to the main tool dedicated to securing funds against today’s high volatility. With partial recovery since, but still at 2% of its peg to the dollar ($0.98) at the time of writing this article.
See Also: Tether Coin Price Prediction 2022
USDT vs Peg – Should You Worry?
Nevertheless, it seems important to set some clocks back on time. First of all so as not to panic before having taken the time to really analyze the situation. That is to say, longer than the time required to read a tweet and immediately log into your account to do anything. Because even significant and historic, this movement remains for the moment part of the room for maneuver – or error – of this stablecoin. With other peaks of the kind already intervened on several occasions. And each time a return to normal in the following hours or days, at most.
All this with the possible origin of the very strong demand that the USDT stablecoin is currently facing, up more than 240% since May 8 (UST affair obliges). And a trading volume that exceeds 149.5 billion dollars over the last 24 hoursaccording to site data CoinGecko. That’s a yearly high, last broken at the 2021 highs recorded at the height of the bull market. But as the only reaction from Tether, a simple tweet published 2 hours ago:
In few minutes Tether will coordinate with a 3rd party to perform a chain swap, converting from Tron TRC20 to Ethereum ERC20, for 1B USDt and from Tron TRC20 to Avalanche, for 20M USDt. The #tether total supply will not change during this process.
— Tether (@Tether_to) May 12, 2022
USDT – Panic or Bear?
Because the current technical manager of Tether, Paolo Ardoino, seems much more busy explaining how his stablecoin is more reliable than an algorithmic and decentralized version. Perhaps for the simple reason that it is ultimately only a private central bank, some of which nevertheless predict bankruptcy. And while at the same time, investors in panic lose fortune rushing to leave the ship, even before being certain that it is sinking. Because for the moment, nothing allows to affirm it. And only one thing is obvious, perfectly summarized in a tweet from the IncomeSharks account:
If everyone says $USDT is going to drop, and everyone sells, then it starts dropping, then people think “oh it’s dropping it’s no longer pegged”. Then it drops more. It’s pretty crazy what’s happening right now.
— IncomeSharks (@IncomeSharks) May 12, 2022
So let’s all take the time to breathe, before triggering an accident. Because for the moment nothing is as catastrophic as some claim. And the only real victims to be deplored at present are those who jump into the void with the frightened herd. Even though this does not exclude monitoring this matter closely during the next few hours…