Market-wide panic ensued after Tether (CRYPTO: USDT) – 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 (NASDAQ: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 $300 million had been redeemed in the last 24 hours.
GM
— Paolo Ardoino (@paoloardoino) May 12, 2022
Reminder that tether is honouring USDt redemptions at 1$ via https://t.co/fB12xESSvB .
>300M redeemed in last 24h without a sweat drop.
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 (CRYPTO: UST), 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 (CRYPTO: DOGE) 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.
— Mudit Gupta (@Mudit__Gupta) May 12, 2022
Looks like a good 5x long opportunity.
NFA, bears can take it to anywhere in a flash crash. pic.twitter.com/fkf0HJFgyG
Some bottom signals are starting to hit:
— Larry Cermak (@lawmaster) May 12, 2022
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
Price Action: At press time, leading digital assets Bitcoin (CRYPTO: BTC) and Ethereum were trading at $27,966 and $1,890, down 8% and 18% respectively over the last day.
