HUSD ‘Stablecoin’ Plunges to $0.3 Following Huobi Delisting
Huobi’s native stablecoin – HUSD – lost its parity with the American dollar and tumbled by nearly 70% after the exchange delisted the asset last week.
At one point, its valuation dropped to $0.28, the lowest level in its three-year existence.
- The leading cryptocurrency platform Huobi announced last week it will no longer support trades for HUSD and urged customers holding the asset to convert them into Tether (USDT) at a 1:1 ratio.
- The news negatively affected HUSD’s price, and its lost its parity against the greenback. It crashed from $0.98 (at the time of the delisting) to approximately $0.31 (at the moment of writing these lines).
- Stablecoins, such as HUSD, are pegged to the valuation of relatively non-volatile fiat currencies like the US dollar and the euro or precious metals, including gold.
- Huobi partnered with Stable Universal and Paxos Trust Company to introduce the token in 2019. The fiat-collateralized stablecoin is issued on the Ethereum blockchain, and its value stays at par with the American national currency, meaning each HUSD is supposed to be backed by a dollar.
- The asset’s collapse reminds of the crash of another token earlier this year – that of UST. Terra’s algorithmic stablecoin lost its peg in May and plunged way below the target of $1.
- Terraform Labs tried to solve the issue by purchasing $2 billion worth of UST, but instead, the move hyperinflated the sister token LUNA and sent both prices to virtually zero.
- The crash caused massive panic in the crypto space and huge investment losses. Nonetheless, HUSD is much different than UST, meaning that the market might not repeat the same scenario. Neel Kukreti – Founder of Crypto Jargon – explained:
“TerraUSD failed due to sudden high “sell” pressure and went into a death spiral crash. HUSD will not cause a TerraUSD level crash, as it can be saved by managing the liquidity issue on HUSD’s end. Their team is currently working on the same.”
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