Tether (USDT), the market’s largest stablecoin fell below $0.96 this afternoon in a sign of further stress in the crypto market.
The stablecoin fell to a 24-hour low of $0.956 on FTX at 3:15 a.m. ET. On Bitfinex, USDT is trading at $0.998, and Bitfinex and stablecoin Tether are subsidiaries of the same parent company.
It is currently unclear what is driving the market event, although widespread concerns around the chaos continue to unfold, fueled by the market collapse of both UST as well as Terra’s original asset. , LUNA, has affected crypto prices in recent days. Bitcoin is currently trading at around $27,500 on Coinbase, according to TradingView data.
Other stablecoins on the market are trading at a premium against USDT as of press time. Binance USD (BUSD) and USD Coin (USDC) are trading at $1.08 and $1.09 respectively through trading pairs on Binance.
Most recently, there was a certain trader who sold $520 million USDT only to get back $130 million USDC. This has dropped USDT peg to 0.995 and it is scaring the market even more.
Unlike the UST, USDT is backed by an asset pool, and investors are said to be able to exchange one USDT for $1 at any time.
Paolo Ardoino, CTO of Tether, tweeted his confidence earlier in the day, saying that the stablecoin operator is “honoring USDT redemptions at $1” and that over $300 million has been redeemed in 24 hours through “without breaking a sweat.”
When contacted by The Block for further comment on Thursday, Ardoino explained in a statement:
“Tether continues to process redemptions normally amid the expected market panic after yesterday. Even so, Tether does not and will not refuse redemption to any verified customer, which is always customary. In the last 24 hours alone, Tether has swapped over $300 million and is still processing another $1 billion with no issues.”
“On Bitfinex, the Tether peg is >$1 while on Kraken a bit lower,” continued Ardoino. “This led to arbitrageurs buying cheap USDT on Kraken and selling it on Bitfinex for a profit. While other market makers bought USDT < 1 USD on Kraken and exchanged it directly for 1 USD, still enjoying profits.”