- USDT peg was not broken, says CEO.
- Tether currently has a circulating supply of around $79.5bn.
LAGOS (CoinChapter.com) — Following the recent decline of the entire cryptocurrency market and the unprecedented crash of stablecoin TerraUSD (UST), many concerns have risen questioning the validity of stablecoins.
While UST plummeted from its dollar peg to about one cent several other stablecoins also witnessed turbulence. Tether (USDT) the world’s largest stablecoin, according to CoinGecko, also broke below its mark, dropping to about 95 cents.
However, Tether quickly regained its peg to the dollar, reassuring users of its ability to act as the digital dollar. At the time of publication, USDT was trading at $1 again, erasing traders’ and investors’ fears of a possible collapse.
The leading stablecoin’s ability to withstand the massive market crash dropping only a few cents as a result of ‘extreme fears’ reemphasized its stability.
The token ability to survive this week’s crash shows it is actually being backed by a strong reserve. Also, it satisfactorily addressed several concerns about whether Tether actually has enough assets to back up its intended $1 peg.
Vijay Ayyar, head of international at Luno, noted that the drop by Tether was “speculation-driven fear” from UST crash. He said:
“The environment is ripe for such news events to cause ripples through the markets as we can see.”
Notably, TerraUSD is different from Tether because it relies on code rather than funds in its reserve to back UST. The stablecoin also it relies on its sister token (LUNA) to stabilize its price.
Tether Stablecoin Peg Was Not Broken —Ardoino
Paolo Ardoino Tether’s CEO has since cleared the air on the drop in the price of the world’s largest stablecoin.
Ardoino in a Twitter Space disclosed that USDT 1-to-1 dollar peg wasn’t actually broken. He pointed out that the stablecoin would have been broken if Tether didn’t honor redemption at $1.
Speaking with Samson Mow, CEO of Jan3, and Adam Back, CEO of Blockstream, Ardoino said USDT only shrank. He further reassured traders and investors of the stablecoin ability to maintain the dollar peg.
Additionally, Ardoino emphasized that the private company behind Tether had no problem with redemptions. He indicated that the token reserve was capable of infusing a $600-million reimbursement in the last 24 hours.
USDT And TerraUSD Price
Tether at the time of publication is firmly back at its $1 peg to the dollar, data from CoinGecko revealed. The stablecoin now has a circulating supply of around $79 billion USDT down from $82.9 billion 24 hours earlier.
However, TerraUSD remains de-pegged from the US dollar since May 9, 2022. UST is down 68.5% in the last 24 hours and is trading at $0.125017.