Tether declares USDT short-selling as “flat out wrong” and said that the collapse of Terra was used by hedge funds as justification to short USDT, and claimed that hedge funds have fundamental misperceptions of the cryptocurrency market and Tether.
Tether declares USDT short-selling and the subsequent thesis being used by hedge funds to short its stablecoin following Terra’s demise in May is “incredibly misinformed” and “flat out wrong.”
In a blog post on July 28, Tether highlighted a Wall Street Journal podcast from June 28 in which the host, Luke Vargas, and the guest, Caitlin McCabe, discussed how short sellers’ interest in Tether was sparked by the cryptocurrency market’s bearishness and concerns about the assets that sustain it.
The simple fact that hedge funds view Terra’s collapse as a constructive thesis to short USDT represents the asymmetric knowledge gap between cryptocurrency market participants and entities in the traditional finance space
According to Tether, the hedge funds that justified their shorting of USDT using Terra’s death “have a fundamental ignorance of both the cryptocurrency market and Tether.”
Early in May, UST abruptly lost its peg, causing the price of LUNA (now known as LUNC), the native token of the Terra ecosystem, to drop from over $60 to a few cents.
Tether’s market cap fell by 21 percent during that time, from $85.3 billion on May 11 to $65.8 billion today, according to CoinGecko, making it the largest stablecoin in the market.
Late in June, Paolo Ardoino, the chief technology officer of Tether, acknowledged that hedge funds attempting to short-sell USDT had launched a “coordinated attack” on the cryptocurrency asset.
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He asserted that hedge funds have been exerting pressure “in the billions” to “damage Tether liquidity” in order to eventually purchase back tokens at a far reduced price.
Tether said in its most recent blog post that a variety of falsehoods regarding its holdings, such as the idea that Tether has issued unsecured loans or that it possesses a substantial quantity of Chinese commercial paper or Evergrande debt, have served as the basis for this short-selling trend. They reiterated that it holds no Chinese commercial paper and had reduced its total holdings of commercial paper by 88 percent over the past year, going from $30 billion to $3.7 billion.
By the end of August, the holdings of commercial paper could be as low as $300 million, and by early November, they will be completely gone.
Read more about the latest Tether news.
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