Key Takeaways:
- USDT depeg FUD spread on June 15.
- Liquidity influx on Aave might have destabilized the coin.
- Circle’s USDC is not likely to benefit any time soon.
YEREVAN (CoinChapter.com) – Tether’s USDT, the largest stablecoin by market cap, traded at $0.99 on June 15, shaving approximately $300 million off its capitalization and triggering depeg rumors across the SEC-spooked market.
However, as of 09:00 UTC, various coin-tracking platforms show USDT valuation is recovering. What triggered the initial drop?
Has USDT de-pegged or not?
According to crypto news outlet LookonChain, a whale dump of USDT took place at approximately 01:00 UTC on June 15.
About 12 hours ago, whale”0x3356″ created a new address to deposit 52.5M USDC and borrowed 40M USDT on Aave and Compound. Then he started depositing 40M USDT into Coinbase and Kraken 6 hours ago. USDT started depegging after whale”0x3356″ deposited USDT to exchanges.
reported LookonChain.
While a depeg is not certain, an influx of USDT liquidity on Aave could have triggered the drop. According to Aave Protocol reports, Tether to supply annual percentage rate (APR) on the lender/borrower rose to nearly 15% from 2.75% in less than 24 hours.
LookonChain also posted several transactions showing a whale shorting USDT in bulk. According to the platform, “CZSamSun,” borrowed over $31.5 million worth of USDT from Aave V2 and exchanged it for an equivalent in USDC, depositing the amount back on Aave.
Merely minuted before the said transaction, the same wallet conducted a similar transaction worth approximately $12 million.
Moreover, Blockworks Research analyst Ren Kong asserted that Uniswap and Curve, two major liquidity pools in the DeFi ecosystem, still experience heightened Tether selling pressure. Curve 3pool holds over 380 million USDT, while Uniswap v3 USDC/USDT pool holds nearly $76 million of USDC and USDT.
Another crypto analyst Miles Deutscher asserted that over half of the Curve 3pool is now comprised of USDT.
Whales have been dumping $USDT, resulting in USDT now comprising 50%+ of the Curve 3pool. The sudden spike in inflows is very abnormal. Either more FUD or somebody knows something. This is the highest it has been since November 2022 (FTX collapse).
said Deutscher.
Will USDC benefit from the FUD?
Meanwhile, the second-largest stablecoin USDC also suffered a de-pegging incident in March 2023, threatening lasting consequences and shaking investors’ trust. As a result, the stablecoin lost altitude parallel to Tether’s surge, confirming its erratic inverse correlation with USDT.
While the latter rallied 26% year-to-date, USDC lost 33% of its market cap.
Also read: SEC Ready To Negotiate With Binance.US As Exchange Uproots From Cyprus.
However, the latest USDT shakeup did not add valuation to the Circle stablecoin. Furthermore, USDC lost another $200 million in market cap in the previous 24 hours. The upcoming sessions will show if the stablecoin crisis will continue.
