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Tether Loses $1 Peg, Bitcoin Drops to 2020 Levels of Near $24K
Weak sentiment around stablecoins may have contributed to USDT’s depegging Thursday morning.
Updated May 11, 2023, 5:24 p.m. Published May 12, 2022, 7:26 a.m.
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The tether (USDT) stablecoin snapped to 97 cents in Asian hours, losing its parity with the U.S. dollar at writing time. It slumped to as low as 96 cents on Coinbase.
Separately, bitcoin (BTC) lost the $27,000 support level and dropped to $25,400, reaching levels previously seen in December 2020.
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Traders sold USDT for U.S. dollars amid poor sentiment for stablecoins in crypto communities. Algorithmic stablecoin terraUSD (UST) earlier this week depegged to as low as 22 cents from its intended $1 level, while Waves’ USDN stablecoin showed signs of weakness on Wednesday night.
The sell-off came even as USDT issuer Tether's Chief Technology Officer Paolo Ardoino confirmed on Twitter earlier Thursday that Tether was continuing to honor “USDT redemptions at 1$” via its website.
GM
— Paolo Ardoino 🍐 (@paoloardoino) May 12, 2022
Reminder that tether is honouring USDt redemptions at 1$ via https://t.co/fB12xESSvB .
>300M redeemed in last 24h without a sweat drop.
CoinDesk confirmed separately with Tether that redemptions continue as normal in European morning hours.
"Tether continues to process redemptions normally amid some expected market panic following yesterday's market," a Tether spokesperson said in an email. "Tether has not and will not refuse redemptions to any of its customers, which has always been its practice."
"On Bitfinex the Tether peg is >1$ while on Kraken it is slightly lower than 1$. This has resulted in arbitrageurs buying USDT cheap on Kraken and selling it on Bitfinex for profit. While other market makers have bought USDT < 1$ on Kraken and directly redeemed it for 1$, still enjoying the profit. But all this is pure market dynamics and has absolutely nothing to do with the value of tether, which continues to hold its peg," the spokesperson further explained.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
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