- In the second week of May 2022, Tether fell below the 1:1 dollar peg.
- Following the recent crypto crisis, Tether has paid out $10 billion in withdrawals.
Terra has witnessed the most unexpected incident in the unpredictable cryptocurrency market. The de-pegging of one of the most popular stablecoins has resulted in a 99.7 percent reduction in value. Since it dropped from the top ten cryptocurrencies to position 253, LUNA is notable for experiencing the most losses in 2022. There’s been a lot of conjecture over whether Tether (USDT) may fall into the same trap as Terra (LUNA) and go below the US$1 mark.
It is well-known that Tether, amid the very volatile and constantly changing cryptocurrency market, is a reserved-backed stablecoin tied 1:1 to the US dollar. Even though they exist in a volatile environment, stablecoins like LUNA and USDT were thought to pose no threat to the global financial system since they are so stable.
$10 Billion in Withdrawals
It’s also known as an algorithmic stablecoin, pegged 1:1 to the US dollar, with a sophisticated process to keep it there. Since the crypto crisis began in early May, Tether, the multi-billion dollar “stablecoin” that serves as the biggest bank in the cryptocurrency ecosystem, has paid out $10 billion in withdrawals. Depositors are attempting to shift their money to more tightly controlled stablecoins due to the high rate of withdrawals.
In the second week of May 2022, Tether fell below the 1:1 dollar peg and achieved a low of 95 percent. The USDT stablecoin’s management has said that the stablecoin has reduced its exposure to commercial paper while maintaining the bulk of US Treasuries in reserve. In third place among all cryptocurrencies, USDT is one of the most popular stablecoins. The price is $0.9992, and the total market capitalization is $73.15 billion as per CMC. Because of the spillover impact on other stablecoins, crypto investors are still unsure if Tether will follow the same trend as Terra.