The cryptocurrency market has been in turbulence this week. Due to declining costs, billions of {dollars} price of cryptocurrencies have been liquidated from the market. The collapse of Terra LUNA and the UST stablecoin provides to the huge losses suffered by most merchants.
Tether (USDT) confirmed slight indicators of stress on Wednesday because it barely dropped under $1 to commerce at $0.99 on all main exchanges. The depegging triggered extra panic from merchants already spooked by the 99% drop in LUNA.
USDT drops to $0.99 on main exchanges
After USDT began exhibiting indicators of being unable to maintain $1, the Chief Technology Officer of Tether and Bitfinex, Paolo Ardoino, posted on Twitter, assuring the group that they had nothing to be nervous about. Ardoino mentioned that greater than 300 million USDT tokens had been redeemed on the $1 peg worth throughout the previous 24 hours.
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In response to questions raised by a information outlet about USDT’s stability, Ardoino mentioned that the stablecoin had maintained its $1 worth even in durations of utmost market volatility, including that redemptions have by no means been halted.
“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,” Ardoino mentioned.
The cryptocurrency market is at the moment in a bearish state the place costs nearly mimic what occurred throughout the 2018 market crash. The panic has been triggered by the collapse of the UST stablecoin, which is now method under its $1 peg.
Ardoino talked about the important thing variations between USDT and algorithmic stablecoins resembling UST, saying, “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-Z and above rated issuers.”
The collapse of UST dampens belief in stablecoins
UST, an algorithmic stablecoin for the Terra ecosystem, began depegging from $1 on Sunday. After recovering shortly after, the stablecoins took one more plunge, which introduced down the worth of LUNA. Since then, UST has failed to get well its peg, and it is at the moment buying and selling at round $0.64.
However, Ardoino doesn’t consider that the belief in stablecoins is misplaced. “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.”
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