Major cryptocurrencies such as Bitcoin and Ethereum can frequently experience double-digit percentage increases or decreases in a single day. As a result, the majority of people connect cryptocurrencies with risk. However, other cryptocurrencies attempt to do the exact opposite. Stablecoins are ideally tied to fiat currencies such as the US dollar on a 1:1 basis at all times.
But what if that proportion is no longer constant?
Who will come out on top?
Terra’s depegging and final collapse shook the cryptocurrency world. Following its demise, several prominent stablecoins such as Tether (USDT), USD Coin (USDC), and DAI saw adjustments. Despite a big advance, it appears that the largest stablecoin, USDT, is still unable to move on from the past.
Tether launched the USDT stablecoin on Tezos on June 9, becoming the 12th blockchain to support the famous stablecoin.
Indeed, it contributed to USDT’s astronomical market cap of R1.1 trillion. But only for a short time. The largest stablecoin had a new 0.1 % adjustment as it stood at R15,70.
According to CoinGecko, the largest stablecoin after tether, USD Coin, earned R5 billion in market value, while Binance USD, which became the third-largest stablecoin, gained another R22 billion. Both had remained pegged at $1 (R15,86).
More than 130 major cryptocurrency holders have increased their USD Coin balance since May 9. These investors boosted their shares by at least R15.9 million while decreasing their Tether balance by at least R15.9 million.
Tether has definitely experienced huge losses. To make matters worse, during the last two weeks, investors have withdrawn more than R159 billion from USDT. As a result, the digital asset’s market cap has dropped to R1.2 trillion over the course of the year. USDT’s market cap fell by R174 billion between May 9 and the time of writing, when holders began exchanging the stablecoin for USD and UST.
Choose a side
Of course, USDT remains the market leader in the stablecoin space. However, concerns have begun to spread over time. Tether claims to hold a comparable amount of reserves to the US dollar, which comprises commercial paper, bank deposits, precious metals, and government bonds.
However, Tether has not fully revealed its reserve investments, which could include various illiquid or leveraged assets.
Binance founder and CEO Changpeng Zhao described Tether as a high-risk stablecoin due to a lack of awareness and information regarding its reserves. “To most people, including myself,” he said, “it’s a black box.”