USDT remains strong amid stablecoin crisis, Tether CTO says

The LUNA/UST event caused discrepancies in the BTC-stablecoin trading pair of different cryptocurrency exchanges around the world. Cryptocurrencies are still feeling the effects of the TerraUSD disaster and the market continues to suffer heavy losses.

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While Tether (USDT) is trading below $0.99, showing signs of stress – Paolo Ardoino, CTO of Tether and Bitfinex, accepts Twitter People are assured that 300 million UDST tokens have been exchanged for $1 within 24 hours.

As a reminder, tether redeems $1 in USDt via http://tether.to.

Converted >300M in the past 24 hours without a single drop of sweat.

Tether’s CTO assures that the $1 peg remains strong despite recent events. He noted that they have remained stable through multiple black swan transfers and highly volatile markets, and have never turned down redemptions with them.

Adoino said;

Amid some of the expected market panic following yesterday’s market, Tether continued to process redemptions as normal. Nonetheless, Tether has not and will not deny redemptions to any of its customers, as it has always done.

The Difference Between USDT and Algorithmic Stablecoins

It’s hard to make decisions when the market is uncertain. Ardoino provides perspective on the technical differences between USDT and algorithmic stablecoins, which may help reduce some of the fear, uncertainty and doubt in the market.

Unlike these algorithmic stablecoins, Tether has a strong, conservative and liquid portfolio that includes cash and cash equivalents such as Treasury bills, money market funds and commercial paper held by issuers rated A-2 and above.

Ardoino believes that stablecoins will continue to be an important part of the cryptocurrency space, although the Terra (LUNA)/UST situation has led some to lose confidence in their ability to redeem token swaps at a $1.00 peg.

He said he doesn’t think people have lost trust in centralized stablecoins. Instead, he believes people will always use them because they provide a way for traders to interact with the larger crypto ecosystem.

Bitcoin bounces off the $25,000 support that is currently trading above $27,000 | Source: BTC/USD price chart from Tradingview.com

The collapse of stablecoins UST and LUNA sent shockwaves through the market. However, customers can exchange LUNA for 1 UST and vice versa because the relationship is very simple.

When the price of UST fell below the $1.00 peg, many people started trading it for LUNA. This is called carry trade. People burn UST for $1.00 worth of LUNA, which they then sell for a profit. But because so many people are doing it, the value of LUNA has been declining.

Related reading | LUNA is not alone in Crimson: APE, AVAX, SOL, SHIB all lose 20% in crypto crash

The Crypto Fear and Greed Index measures how people feel about cryptocurrencies. It’s in the “extremely fearful” range, which means investors don’t feel good about it.

Stablecoins have always been the cornerstone of stability in the cryptocurrency world. Nonetheless, recent events such as the bump in 2020 and the LUNA/UST teaming have affected other prominent dollar-pegged coins.

             Featured image from Flickr, and chart from Tradingview.com



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