Just as the crypto space is experiencing the most dreadful days in its history, the said backbone ‘Tether’ also tumbles up. No doubt the USDT peg-de-peg is just a normal routine during the bull run and market corrections. But this time it may be a matter of concern as the crypto space is filled up with deep FUD and in such case, minor turbulence for the USDT may hamper the entire market for a longer time.
It all started when the UST lost its peg and fell to $0.29 for a few moments. Being a stablecoin, such a drastic drop cannot be considered a good sign and therefore may start to believe that USDT might suffer the same fate as well. One from Twittererati just put together an interesting liquidation of $130 million worth of USDT by paying a 400% premium, which amounts to $500 million. And therefore think that this huge dump initially drove the price to $0.995.
Further, when huge amounts of USDT were flown into USDC or BUSD, Tether came up with its own swapping strategy.
Here, Tether intends to trade one billion USDT from TRC20 to ETH20 and 20 million USDT from TRX20 to AVAX, without hampering the total supply of USDT. However, a similar “DEJAVU” moment is speculated, as UST founder Do Kwon also made a similar announcement just before the surrender began.
Will USDT De-Peg be Similar to UST?
A panic still hovers within the space as most of the trading pairs in almost all the exchanges are USDT. The asset enjoys being cemented at the top of the leader board of the most traded asset with the highest volume ever. And hence if in such case USDT de-pegs, then it is a big threat to the existence of the crypto space.
However, the majority of them believe that USDT might normalize very soon as these fluctuations are quite normal. And hence, anyone can easily exchange 1 USDT for 1 USD and hence the asset will restore the Peg at the earliest.
Yet, many still believe that USDT is not back by USD but liquid reserves and if these reserves dry up, then it may be even worse than the current conditions. In the meantime, USDC/USDT gets blown up as it trades at $1.10 on several exchanges. On the other hand, some accumulate USDT at discounted prices.
