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Tether Supply Drops $2B While USD Coin Rises
© Reuters. Tether Supply Drops $2B While USD Coin Rises
- Some cryptocurrencies have managed to overcome the difficulties generated by the crypto winter and are struggling to maintain their parity against the dollar.
- Around 2 billion Tether (USDT) were redeemed in the last two weeks for other cryptocurrencies, including USD Coin (USDC).
- Loss of parity for dollar-pegged stablecoins is becoming more and more frequent, due to mistrust and pessimism.
Stablecoins have not been able to escape the cryptocurrency crisis this year, which worsened after the collapse of the FTX exchange. The tokens that maintain their parity against the dollar have also lost confidence among institutional investors.
However, in the last two weeks USD Coin (USDC), the stablecoin issued by the American company Circle Financials Ltd., has been challenging its rival, Tether (USDT), for leadership in the sector.
During this period there has been a sell-off of USDT exceeding $2 billion, according to data from CoinMarketCap. Meanwhile, the USDC supply has grown from $44bn to $44.7bn this week, despite falling on Nov. 24 to $43.7bn.
The Tether sell-off has been sparked by skepticism from some large investors regarding the strength of the stablecoin’s financial reserves. After the fall of FTX, mistrust increased. Despite the fact that Tether has insistently explained that it has no material exposure to the failed exchange.
The decline in the confidence of large traders has resulted in a massive swap from USDT to USDC, which has been observed in recent days. The precedent for a similar movement recorded after the collapse of the Terra/Luna cryptocurrency is not without concern for many.
When the price of the algorithmic stablecoin created by Do Kwon and Daniel Shin’s South Korean company TerraLabs completely tanked, about $10 billion of USDT was exchanged over two weeks.
On the Flipside
- The reasons behind the drop in the USDT market capitalization are several, but mainly it is due to the loss of investor confidence.
- Media reports and rumors about the financial health of the stablecoin have long been circulating.
- Tether has always faced questions about the financial structure that supports USDT.
Why You Should Care
The distrust and pessimism of the market have also manifested themselves in the price of other stablecoins, such as Binance’s BUSD. The token’s supply has decreased from $23 billion to about $22.5 billion, representing a net loss of $500 million, according to data from CoinMarketCap.
The other stablecoin that has been able to overcome the difficulties arising from the crypto winter is Pax Dollar (USDP) whose demand has also grown along with that of USDC. However, the loss of parity of the currencies linked to the dollar has become frequent.
If you want to read more on USDT and USDC, check out these other articles:
Tether (USDT) Reserves Fell $16 Billion in Q2
USDC Stablecoin Issuer Circle Adds Apple (NASDAQ:AAPL) Pay Support
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