Tether (USDT) lost its dollar parity on Thursday as UST’s debacle sent shockwaves across the stablecoin market amid serious sell pressure in the wider industry.
According to CoinMarketCap, the slump has been as low as $0.97.
- On the other hand, USDT fell to $0.969 on Coinbase but has since recovered and was trading near $0.98.
- The reason can be attributed to the fact that the stablecoin sentiment has gone downhill following the TerraUSD (UST) saga, which triggered many unnerved investors to look for safer avenues to park in.
- In recent days, redemptions for stablecoins have been high, during which a dollar from the reserves is sent to the user, and the dollar-pegged token is removed from its supply.
- Amidst substantial stress on USDT and high volatility, Tether and Bitfinex CTO Paulo Ordoino affirmed to the USDT holders that more than 300 million the stablecoin tokens had been redeemed at their $1 peg over the past 24 hours.
“GM, Reminder that tether is honoring USDt redemptions at 1$ via a tether.to .
>300M redeemed in last 24h without a sweat drop.”
- Separately, Tether said that it had begun a chain swap for its tokens. Namely, the company will convert one billion USDT from Tron’s blockchain to Ethereum’s. Additionally, it will move 20 million USDT from Tron to Avalanche.
- It’s important to note that USDT losing its peg on certain cryptocurrency exchanges doesn’t mean it has been depegged so long as Tether (the company backing it) can its redemption at a 1:1 parity with USD.
- Another algorithmic stablecoin that showed signs of drifting away from USD was Neutrino USD (USDN) of the Waves blockchain ecosystem. On Wednesday, USDN plummeted as low as 23 cents.
- With the UST contagion spreading, other lesser-known algorithmic stablecoins are in fear of meeting a similar fate.