The past four days have been quite hectic in the crypto market. The news was dominated by the crash of Terra (LUNA) after its stablecoin UST lost its peg with the US dollar. But it looks like Tether (USDT), the largest dollar-pegged stablecoin, is also feeling the heat. Here are the main points:
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Recent Data Shows Tether Faces Increased Liquidation Triggered by the Broader Crypto Crash
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USDT has lost its value against the dollar by around 4.8% in the last 24 hours
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This is the lowest Tether in the last 5 years
Data source: Tradingview
Will Tether (USDT) Follow the UST Crash?
Tether (USDT) is the largest dollar-pegged stablecoin in the world. It has a market capitalization of around $81 billion. It may seem too big to fail, but nothing is guaranteed in crypto. After Terra’s UST lost its peg against the dollar, the catastrophic fallout had a huge systematic impact on the entire market.
The UST has recovered somewhat and is now trading at 60 cents per dollar. But it is very difficult to ignore recent developments. For example, the UST crash may have shaken investor confidence in dollar-pegged stablecoins, including Tether. Additionally, USDT fell around 4.8% against the dollar.
At some point in the past 24 hours, the stablecoin hit its lowest level against the dollar in 5 years. As the market continues to crash, investors are likely to withdraw their USDT holdings, which could have massive effects on the Tether peg.
Should we be worried?
Well, this is not the first time the crypto market has crashed. So, even though there is a lot of pain in all areas, a recovery will come soon.
However, the downside risks associated with Tether are increasing, and it will come as no surprise if the stablecoin loses its 1:1 dollar peg in the near term.
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