Market-wide panic ensued after Tether USDT/USD – the largest stablecoin by market cap – began losing its peg to the U.S. dollar.
What Happened: According to data from Benzinga Pro, USDT fell to an all-time low of $0.948 across major exchanges like Coinbase Global Inc COIN on Thursday.
USDT dumped to $0.969 on Coinbase. pic.twitter.com/8Xylki4SSw
— Alex Svanevik(@ASvanevik) May 12, 2022
Tether CTO Paolo Ardoino stated on Twitter that the stablecoin is honouring all USDT redemptions at $1 and over $300 million had been redeemed in the last 24 hours.
Reminder that tether is honouring USDt redemptions at 1$ via https://t.co/fB12xESSvB .
>300M redeemed in last 24h without a sweat drop.
— Paolo Ardoino (@paoloardoino) May 12, 2022
Why It Matters: USDT has a market cap of over $79 billion and is the largest stablecoin in the crypto industry. Unlike algorithmic stablecoins like TerraUSD UST/USD, USDT keeps its peg to the U.S. dollar through Tether’s reserves.
See Also: HOW TO BUY TETHER (USDT)
Although the centralized stablecoin has been the subject of controversy, its large market cap is indicative of exactly how much of the crypto economy is reliant on its continued stability.
“if tether dies, it’s all over friends,” wrote Dogecoin DOGE/USD cofounder Billy Markus on Twitter.
Others were reluctant to buy into the narrative that USDT would suffer the same fate as UST.
This is peak hysteria. USDT is not UST, anon.
Looks like a good 5x long opportunity.
NFA, bears can take it to anywhere in a flash crash. pic.twitter.com/fkf0HJFgyG
— Mudit Gupta (@Mudit__Gupta) May 12, 2022
Some bottom signals are starting to hit:
1. funds getting blown up
2. forced selling of alts and 95% crashes
3. USDT irrational panic
Feels like capitulation all morning. Macro can keep rugging so who knows though
— Larry Cermak (@lawmaster) May 12, 2022
Price Action: At press time, leading digital assets Bitcoin BTC/USD and Ethereum were trading at $27,966 and $1,890, down 8% and 18% respectively over the last day.