Tether Lost Its Dollar Peg Amid Ongoing Stablecoin Situation

Tether lost its dollar peg amid the ongoing stablecoin crisis and the de-pegging of the UST stablecoin so let’s read more today in our latest Tether news today.

The first and biggest dollar-pegged stablecoin lost its peg amid the stablecoin crisis. Tether lost its dollar peg and recovered some but it is still trading at $0.98 as per the data from CoinGecko. The market cap of more than $81 billion. The CTO of Tether and Bitfinex Paolo ARdoino noted:

“On Bitfinex the Tether peg is [greater than] $1 while on Kraken it is slightly lower than $1. This has resulted in arbitragers buying USDT cheap on Kraken and selling it on Bitfinex for profit. Other market makers have bought USDT [for less than] $1 on Kraken and directly redeemed it for $1, still enjoying the profit. But all this is pure market dynamics and has absolutely nothing to do with the value of Tether which continues to hold its peg.”

Tether’s volatile price action came amid the crisis week for the industry following the implosion of Terra’s stabelcoin UST ad the 10% drop from the market leader BTC. Once the third-biggest stablecoin UST was initially de-pegged by a few centers last week. The collapse was quite monumental and it fell as low as $0.2998 with a 71% decline from its dollar peg. The coin now trades at $0.62 as per the data from CoinGecko. UST and USDT are the two different types of stablecoin UST is the algorithmic stablecoin controlled by the smart contracts and USDT is backed by the Tether reserves.

One USDT is issued for one dollar’s worth in an equivalent asset deposited into Tether and vice-versa so according to the reports, these assets include cash, commercial paper, corporate bonds, and other assets. The reserves of Tether backing USDT includes 83% cash and cash equivalents, 4.61% corporate bonds and precious metals, 5.27% of the secured loans, and 6.38% of other investments like digital tokens. Out of the 83.74% cash and cash equivalent figure the company, just 6.36% is in cash and bank deposits. The redemptions for these digital dollars also were quite high.

Over the past day, more than $300 million of USDT were redeemed which is a process of converting USDT to cash dollars as per Tether’s CTO Paolo Ardoino. During the redemption, the dollar from the reserves was sent to the users and USDT is removed from the token’s supply:

“Honouring USDT redemptions at $1, [more than] $300 million had been redeemed in the last 24 hours without a sweat drop.”

Other stablecoins like BUSD and USDC are pegged to the dollar and trading at a slight premium against USDT.