Tether (USDT) Price Breaks Below the Dollar Peg
Record trading activity and selling pressures pushed the limits of the stablecoin, causing renewed fears that the BTC market is too dependent on USDT liquidity injections.
The recent encouraging Bitcoin (BTC) rally once again came with stern warnings concerning the influence of Tether (USDT), the leading stablecoin. Unprecedented trading activity above $45 billion’s equivalent and heavy selling pressures led to a breakdown of the USDT dollar peg, falling as low as $0.98.
While this breakdown is not catastrophic, it is an indicator of a possible scenario, where USDT unravels to a much lower level. So far, the loss of trust has not materialized as expected, but selling pressures certainly affect USDT.
During last week’s sell-off, each USDT coin went through the trading ecosystem more than 10 times in 24 hours. This turnover happens at volumes of more than $37 billion’s equivalent in 24 hours, as the supply has grown to more than 3.58 billion coins.
https://twitter.com/Diditaihuttu/status/1144155302218149888
An additional 1 billion USDT has been printed on the Ethereum blockchain, bringing the entire supply of the stablecoin to above 4.58 billion, spread across crypto-only exchanges.
Because Tether, Inc. has no restrictions on printing, there are fears that large-scale investors could coordinate to use USDT and pump the price of BTC, later selling off to newcomers with real fiat. The effect of attempted cashouts is either the overwhelming of Coinbase, or the fact that Gemini USD (GUSD) has been liquidated, diminishing its supply by about 50 million coins in three months.
Cashing out USDT is only possible through Kraken, where direct selling pressure pushed USDT down to $0.97. The recent price crash is far from the crisis of December 2018, when USDT fell as low as $0.85.
The Tether Rich List also reveals that USDT is much more spread out through exchanges, with a significant concentration on Binance. USDT was also behind the increased activity on Asian exchanges, where crypto-only trading has displaced trades against the Japanese yen and Korean Won.