Panic spread among crypto traders and the crypto market has become viral this week after a dramatic plunge in the TerraUSD and Luna tokens. Many investors simply lost faith. Others, however, have still survived the big game and are playing Russian roulette.
After the shivering news of TerraUSD’s dramatic fall, now it was time for the world’s largest stablecoin, Tether, to lose its peg to $0.95. The stablecoin fell to $0.9455 early Thursday before rebounding to trade at $0.9867 as of 4.24 p.m. according to data collected by Coinmarketcap, which is considered its lowest level since the 2017 crypto crash.
Image by coinmarketcap.com
The ongoing crypto crash has made many investors pull out of the crypto market or sell USDT for U.S. dollars, even with an 8% discount, considering the poor sentiment for stablecoins in crypto communities.
Stablecoins are cryptocurrencies that should always be worth $1 in order to provide calm during turbulent times. Crypto traders use these coins widely as a supposedly steady and less volatile place to park their cash.
Tether’s price dropping below $0.97, shows that it has issues with USD pegging. Investors are now extremely wary of any depegging by a stablecoin, after TerraUSD (UST) and Tether (USDT) drastically lost their dollar peg this week.
Early Thursday, Tether Chief Technology Officer Paolo Ardoino announced in a Tweet that the token had honored $300 million redemptions to USD in the past 24 hours, “without a sweat drop,” he insisted.
The crypto exchange that operates USDT, known as Bitfinex, claims to back USDT’s value with a massive reserve pool, which is 84% made up of cash and cash equivalents according to data from the organization. It may also add to the consolidation of the statement that "all tether tokens are fully backed," said by Tether's management in October.