Fearing a De-peg, Whales Dump $710 Million Worth of Tether (USDT)
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Whales have been actively dumping their USDT holdings on the market after the danger of a de-pegging, according to the most current statistics from Santiment. The price of USDT briefly fell to $0.97 yesterday, but quickly returned to $1.
In case there was any doubt on the seriousness of #Tether losing its $1 peg, key whale addresses have dumped a total of $710M in $USDT today. This is the largest one-day dump from 100k to 10M $USDT addresses in #crypto's largest #stablecoin's history. https://t.co/oJVZbgvGbt pic.twitter.com/N7shiVIEz6
— Santiment (@santimentfeed) May 12, 2022
Key whale addresses sold $710 million of Tether in yesterday’s trading session alone, according to on-chain statistics. The enormous selloff is currently regarded as the greatest one-day dump of USDT on whale addresses in history. Santiment has not supplied any information regarding the network to which these IP addresses were assigned.
The fundamental cause of the whales’ concern was very definitely UST’s difficulties in maintaining the peg with the US dollar. Exchanges and decentralized smart contracts reported large outflows from the most stable assets on the bitcoin market.
Tether’s USD peg and improved market position compared to other algorithmic stablecoins like Terra’s UST are due to a new process for maintaining the stable coin’s connection with the US dollar.
Tether has much higher reserves than LFG, and the stablecoin is backed by real money as well as a tiny percentage of digital assets and commercial documents. When opposed to stable assets backed by relatively volatile cryptocurrencies, diversification is the key to maintaining USDT more stable.
According to Tether’s price history on CoinMarketCap, despite a brief plunge below $0.99 during unusually high volatility on the cryptocurrency market, which was the cause of yesterday’s decline to $0.97, the coin has had no trouble maintaining the $1 price.
Paulo Ordoino, CTO of Tether and Bitfinex, came to Twitter to reassure USDT holders that over 300 million UDST tokens have been redeemed at their $1 peg in the previous 24 hours.
In light of recent occurrences, Cointelegraph reached out to Tether CTO Paolo Ardoino to see if there is reason to be concerned about USDT’s capacity to retain its $1 peg. Ardoino emphasized that the USDT has never denied redemptions despite many black swan occurrences and extremely turbulent market circumstances.
“Tether continues to process redemptions normally amid some expected market panic following yesterday’s market. In spite of that, Tether has not and will not refuse redemptions to any of its customers, which has always been its practice.”
Given the technological differences between USDT and algorithmic stablecoins, Ardoino provides some perspective:
“Unlike these algorithmic stablecoins, Tether holds a strong, conservative, and liquid portfolio that consists of cash & cash equivalents, such as short-term treasury bills, money market funds, and commercial paper holdings from A-2 and above rated issuers.”
Despite this, Ardoino feels stablecoins will remain an important gear in the bitcoin wheel:
“I do not believe that trust was ever lost for centralized stablecoin users. There will always be a market for stablecoins as they present an opportunity for traders to interact with the larger crypto ecosystem.”
Stablecoins have long provided a source of stability for cryptocurrency markets throughout the world, but the rocky ride of 2022, along with the LUNA/UST fiasco, has had a rippling effect on other notable dollar-pegged coins.
