The USDT stablecoin lost its dollar peg amidst the recent market turmoil causing Whale addresses to dump their holdings. However, it has since recovered but is yet to reach its dollar parity.
Last week, the general crypto market downturn saw the USDT stablecoin lose its dollar peg as FUD skyrocketed. The situation led to a massive sell-off as whale addresses sold at least $710 million in USDT in just a day. According to Santiment, this represented the most significant single-day dump for 100,000 to 10 million USDT wallet addresses in the stablecoin’s history.
Accordingly, Santiment’s data shows that whale USDT holdings declined to their lowest point in three months. The slump also ensured that addresses holding between 100,000 and 10 million had less than 33% of USDT’s supply for the first time since February.
Experts Say USDT Depeg Not A Threat
Following USDT decoupling from the dollar, several experts have all come out to allay fears of any significant threat to the financial system. According to US Treasury Secretary Janet Yellen, the stablecoin market is not mature enough for a price decline to cause concern.
She made the remarks at a hearing of the House Financial Services Committee on the Financial Stability Oversight Council’s Annual Report to Congress. Additionally, she made a case for a US Central Bank Digital Currency (CBDC) which she says could significantly impact the structure of financial intermediation.
Consequently, her sentiments align with the International Monetat Fund(IMF), which has continued to advocate for CBDCs. The clamour for this digital currency has reached a fever peak, with recent reports suggesting that 90% of Central banks are considering CBDC.
Additionally, Tether’s chief technology officer Paolo Ardoino assured traders that USDT is not like algorithmic stablecoins like UST. The market decline saw the UST lose its dollar peg and is now trading at $0.127, according to Coinmarketcap. Also, its sister coin suffered an even worse fate as its market value bled totally, eventually leading to several exchanges halting their trading.
Furthermore, Ardoino revealed that Tether has a strong, conservative, and liquid portfolio of cash and cash equivalents. He further pointed out that the ongoing FUD around stablecoins was simply a money-making scheme for several traders.
Meanwhile, Tether has since recovered from its slip. However, it is yet to get back its dollar peg. According to Coinmarketcap, it is currently trading at $0.9989, but it has seen a significant loss in its market capitalisation. So far, $8 billion has been wiped off its value which was at $83 billion but is now around $75 billion.
Other Stablecoins Gain Market Share
Tether’s Depegging and subsequent loss in value has seen other stablecoins gain a chunk of the market share. The USDC, the second biggest stablecoin behind Tether, has recently seen significant gains in its market cap.
Source: Coinmarketcap
Since the market downturn and FUD with Tether, the USDC has seen its value grow from $48.4 billion to $51.2 billion. This represents a 5.2% increase in its stablecoin market share and reflects growing confidence among investors for the compliant stablecoin.
Do you think the current stablecoin FUD and dollar decoupling pose a significant threat to the financial markets? Let us know your thoughts in the comments below.
Chris is a crypto enthusiast and a firm believer in the blockchain’s ability to create a new financial paradigm. Through writing, Chris hopes to expose the intricacies of this disruptive technology and how it is beneficial to Africans and developing countries. He aims to give readers a rational and unbiased outlook of the industry by equipping them with the necessary information to make enlightened investment decisions.
