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Tether (USDT) at $0.96, But You Shouldn't Worry About De-Peg

Thu, 05/12/2022 - 08:11
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Arman Shirinyan
Tether is being pushed down heavily as the panic on the crypto market aggravates
Tether (USDT) at $0.96, But You Shouldn't Worry About De-Peg
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Following the turmoil on the cryptocurrency market and the de-pegging of UST stablecoin—which caused a drop in most digital assets—Tether also had issues with USD pegging as its price dropped below $0.97.

Is Tether mimicking UST's faith?

Following the news of the price drop of USDT, users started manically moving their funds away from the stablecoin and sending them to more centralized solutions like USDC. According to orderbooks on various exchanges, investors are ready to sell their USDT with an 8% discount.

Tether Chart
Source: CoinMarketCap

But the panic around the biggest stablecoin on the cryptocurrency market is purely speculative and psychological as Tether's reserves are at a significantly higher level compared to UST, which was backed with two extremely volatile assets like Bitcoin and Luna.

According to Tether's official website, its stablecoins are backed with actual cash or its equivalents and short-term deposits. Only 6.3% of Tether's backing are digital assets marked as "other investments."

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But despite the diversified backing of the stable, industry experts still had a lot of questions about "commercial papers" that could essentially be anything, including loans to foreign developers, which is illegal in some jurisdictions.

Not the first run for Tether

Despite remaining the biggest stable asset on the cryptocurrency market, USDT had issues during high volatility periods on the cryptocurrency market. According to CoinMarketCap, on April 23, 2017, USDT had a brief drop to $0.97 and then failed to recover immediately.

It took more than a week for Tether to recover back above $1, which will most likely be the case during this selloff. At press time, Tether remains at $0.96, while UST's peg had been lost completely as it trades at $0.5.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.