The cryptocurrency market has struggled in recent months, enduring declines from all corners. First and foremost, the algorithmic stablecoin, UST, crash sowed turmoil in the overall marketplace.
Its cousin Tether responded by wavering from its peg, triggering worries about its status as a hiding place during market turbulence. Though things seem to settle, for now, nobody is feeling secure. More precisely, Tether certainly is not.
Prepare for Rough Rides
Panic in the cryptocurrency market saw the world’s leading stablecoin, Tether, breaking beneath its $1 tie. Furthermore, Tether (USDT) traded at $0.9995 at this publication. Market players question whether Tether had adequate assets to support the (intended) $1-dollar peg. Keep in mind that the company Tether had claimed all its assets are one-to-one backed through dollars in reserves.
Meanwhile, the New York Attorney General settlement confirmed Tether depended on several other assets. That comprised commercial paper – an unsecured debt. That saw Tether reducing commercial paper in the reserves and highlighted plans to trim its holdings more with time.
Addresses with $100K – $10 million in the leading stablecoins approached 3-year lows as far as held supply is concerned. Furthermore, USDT whales now control the lowest portion of Tether’s supply, exploring levels never witnessed since August 2019.
Will such scenarios change? Yes. Santiment’s July 7 tweet shows USDT accumulations like 2021 summer’s bounce-back would paint an impressive sign for the stablecoin. Nevertheless, the near-term outlook reveals a grim case for the leading stablecoin. For instance, Tether’s closest competitor, USDC, may dominate headlines.
Remember, USDC remains the most utilized in transferring volume, boasting 51.6%. DAI and Tether have shares of 12.9% and 23.8%, respectively. Furthermore, USDC surpassed USDT by daily transfers on the ETH blockchain two weeks ago.
Frying Pan to the Fire?
Amidst its struggle, Tether sees countries launching clampdowns on its platform. For example, Beijing’s Court cancels salary payments via stablecoins like USDT. That is according to the July 6 reports from the Beijing Daily news agency. That might mean (USDT) jumping from the frying pan to the fire.
Stay tuned for upcoming updates.
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