Tether (USDT)the biggest stablecoin in the world, lost its dollar backing, falling to $0.94 this Thursday (12), as the crypto market panics after the collapse of the tokens of the earth network: MOON and the stablecoin EarthUSD (UST).
tether is a centralized stablecoin created by the company of the same name. Currently, the coin is the largest stable coin on the market and the third largest in the overall ranking, behind only bitcoin (BTC) and ethereum (ETH). tether It has a market capitalization of US$81.4 billion.
The stablecoin has dropped to US$ 0.9455 in the early hours of this Thursday, before returning to the price of US$ 0.983. At the time of publishing this news, USDT registered a drop of 1.46% in the last 24 hours, the US$ 0.9849.
According to Business Insider, this was the biggest drop for stablecoin since March 2021. The current stablecoin crisis scenario raises concerns, as the asset is considered essential for the functioning of the cryptocurrency market.
The second largest stablecoin on the market, US Dollar Coin (USDC)remains firm, so far, to the backing and parity with the dollar.
Earth implosion will take Tether with it?
THE collapse of Earth network tokens, UST and MOON, this week generated a sense of panic in the crypto market. The UST stablecoin, until then the third largest on the market, collapsed to US$ 0.2998 on Wednesday.
Already MOONthe governance token and staking in Earth, had an almost absolute loss. At the time of publishing this news, the token was trading at $0.098 after falling over 96% in the last 24 hours.
Before going ‘downhill’, LUNA was among the top ten cryptocurrencies market, but now occupies the 118th position.
“Stablecoin volatility is a new reality for the cryptocurrency market,” said FxPro Senior Market Analyst Alex Kuptsikevich. “Before, investors preferred to park their capital in stable currencies.”
“The entire crypto market is falling like a house of cards,” said Kuptsikevich, with bitcoin down 28% in the last week and ether losing 33% of its value over the same period.
Unlike the emission and burning mechanism of UST, tether it has reserves in liquid assets, which should be able to maintain a 1:1 parity to the dollar at all times.
However, in the past, tether has already been the target of criticism that questioned whether the company behind the stablecoin had enough assets on hand to handle massive investor withdrawals.
According to Business Insider, analysts pointed out that a possible stampede of investors in tether could be disastrous for the cryptocurrency market due to the importance of stablecoin in trading.
A large sale of the net assets of tetherwhich include corporate bonds, could affect other markets as well.
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