Ever since Tether temporarily lost the dollar peg last week, there appears to be a massive liquidation. Apparently, the crypto crash prompted by the devaluation of UST of another stablecoin, Terra, has had a significant impact on investor sentiment.
Massive Tether Liquidation
According to data from CoinGecko, $7 billion worth of Tether has been liquidated within a week. The world’s largest stablecoin has suffered a major setback, with its market capitalization falling from $83 billion last Tuesday to now $75 billion.
Tether still holds the distinction of being the third largest cryptocurrency. Another stablecoin, USDC, with a market cap of $52 billion, ranks fourth in terms of market cap. Interestingly, despite widespread market resistance against stablecoins, USDC’s circulating supply increased from $48 billion to $4 billion last week.
The price of Tether fell as much as 95 cents on Thursday amid a bearish stablecoin market in the cryptocurrency. This sparked a debate among traders over the reliability of stablecoins. Whether there was sufficient fund reserves that acted as collateral to support the stable money supply was a cause for concern.
‘Tether Fully Supported’
In this context, Tether Chief Technology Officer Paolo Ardoino said, “Tether is fully supported.” he was answering a Tweet On Tuesday, an analyst asked whether all of Tether’s $75 billion is fully backed.
“We have redeemed 7B in 48 hours without blinking an eye. How many institutions can do this? We can go ahead if the market wants, we have all the liquidity to handle the big redemptions and pay all 1 to 1. Yes, Tether is fully supported.”
Adding to this, FTX CEO Sam Bankman-Fried said that successfully redeeming $7 billion proved there were reserves to send back.
Fears about the stability of stablecoins stemmed from the recent fiasco related to the massive drop in Terra’s UST. This has also created uncertainty regarding the cash reserves of various stablecoins.
However, Bitfinex, the cryptocurrency exchange that operates Tether, claims to back Tether’s value with approximately 84% of cash and cash equivalents. As previously announced, Tether is currently working on an audit, Ardoino said in a tweet thread.
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