February 29, 2024
tether USDT

The foremost stablecoin in terms of market capitalization, Tether (USDT), has encountered notable performance that has sparked concerns and speculations among investors and traders.

Tether, the stablecoin has experienced a bearish trend, falling below its dollar peg and presently trading at $0.9977. This indicates a decline of 0.25% within the 24-hour trading session. Nevertheless, Tether’s Chief Technology Officer (CTO) has taken to his Twitter page to reassure investors and traders that this recent development should not be a cause for concern.

Tether CTO calls it FUD

Taking to Twitter, Paolo Ardoino, the Chief Technology Officer (CTO) of Tether, communicated with the Tether community regarding the current state of the Tether (USDT) market. He acknowledged the prevailing uneasiness in the markets, describing them as “edgy these days.”

Ardoino also shared a humorous “FUD meme” and directly confronted the market rumors circulating about Tether’s deviation from its peg. However, Ardoino provided reassurance that Tether, the extensively utilized stablecoin, is well-equipped and ready to confront any challenges that may arise. He also made it clear that the company is fully prepared to accommodate individuals who wish to convert their USDT tokens into the equivalent value in U.S. dollars.

With confidence, he stated, “Let them come,” demonstrating the company’s readiness and willingness to honor such redemptions. The issue of whether Tether possesses sufficient liquidity to back its USDT tokens has been a significant concern surrounding the company.

Imbalance in Stablecoin Market with USDT Borrowing and USDC Swap

An imbalance in the stablecoin market was primarily attributed to a whale address known as CZSamSun. The address borrowed 31.5 million USDT and exchanged it for USDC, resulting in a slight deviation from USDT’s U.S. dollar peg value. Utilizing 17,000 Ether (ETH) worth approximately $1,737 and 14,000 staked Ether (stETH) as collateral, CZSamSun converted the borrowed amount into USDC using the 1inch Network.

Subsequently, the borrower made deposits of $10 million and $21 million to Aave v2 and v3, respectively. Moreover, the borrower took out a USDT loan of 12 million from v3 and deposited it into v2.

Around 20 minutes after CZSamSun borrowed USDT, another address (0xd2…0701) collateralized 52,200 staked Ether (stETH) via Aave v2 and borrowed 50 million USDC, taking advantage of the USDT/USDC price difference.

The slight deviation in USDT price resulted in the USDC/USDT trading pair on Binance reaching a new yearly high of $1.0034. Within Curve’s 3pool, USDT accounted for 73.79% of the pool, while DAI accounted for 13.05% and USDC accounted for 13.16%.

Concerns and Affirms Stability Amid Market Uneasiness

Critics have generated negative sentiment by questioning the company’s ability to fully support its claims of being backed by the U.S. dollar. Tether aims to provide reassurance and transparency regarding its available resources by regularly issuing assurance reports through the accounting firm BDO Italia.

According to the latest report, a majority of Tether’s reserves are held in cash and cash equivalents, with a substantial portion invested in U.S. Treasury Bills. Additionally, the report reveals that a small percentage, 1.8%, of Tether’s reserves are held in Bitcoin.

The diverse holdings in government-secured investments, cash, and cash equivalents bolster the legitimacy and stability of Tether’s reserves. According to CoinMarketCap data, USDT currently holds the rank of the third-largest crypto asset with a market capitalization of $83 billion.

 

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