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Will Tether (USDT) Be Able To Prove Its Stability Amid Investor Abandonment?

Written by: Sara K

July 4, 2022

Tether (USDT) ‘s claim that it can sustain market-wide withdrawal is not doing well among investors. 

According to statistics from Curve, the largest DeFi stablecoin exchange, Tether’s greatest liquidity pool is firmly based around USDT. It suggests that investors are now abandoning the currency due to alternative stablecoins such as USDC and DAI.

USDT contributes around $650 million of the 3pool on Curve. The other 35% of the pool is shared evenly between USDC and DAI. USDT has been selling slightly less than its dollar peg for almost 2 months and is cheaper than USDC and DAI.

The cryptocurrency market has collapsed to its worst point since 2020, leaving traders unsure of what tokens might disintegrate next. 

Short-Sellers Bet Against USDT

The collapse of TerraUSD (UST), a stablecoin, raised concerns about other coins.

Although USDT has mostly recovered from the May de-peg, doubts over the composition of its reserves have held the currency flat ever since. In addition, Tether has come under scrutiny from market participants for always being secretive about the assets that back it.

Due to a spate of devaluations, USDT’s entire market value has dropped to $15 billion from $66 billion in May. This distances the currency from being exceeded by USDC by around $10 billion.

Following Tether’s continuous efforts to comfort traders about the durability of its holdings, the market rate of the stablecoin has declined. Moreover, according to a study from the week before, several short-sellers are placing bets against USDT.

Tether Stands Strong

Despite the criticism, USDT has continually redeemed itself for over 5 years. Tether boasts of having over $66 billion in holdings supporting the stablecoin and has withstood many crypto storms.

Sam Bankman-Fried, CEO of FTX, has claimed that doubts about USDT were baseless, and he has been confident in the stablecoin performance since the beginning.

Considering that Tether is heavily utilized to enable trading, its collapse will severely affect the cryptocurrency market.

Sara K

Sara is steadily working on cryptocurrency evaluations, news, and fluctuations in digital currency prices. She is guest author associated with many cryptocurrencies admin and contributes as an active guide to readers about recent updates on virtual currencies.

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