Stablecoin News: Tether (USDT) Depegs With Massive Sell-Off, Here’s Why – NewsTo
Stablecoin News: Tether (USDT) Depegs With Massive Sell-Off, Here’s Why

Stablecoin News: Tether (USDT) Depegs With Massive Sell-Off, Here’s Why

There were indications of significant activity involving the sale of millions of dollars’ worth of tether (USDT) stablecoins on popular Uniswap and Curve pools on Thursday morning, which caught the attention of traders. The balance of USDT on Curve’s well-known 3pool, consisting of USDT, USDC, and DAI stablecoins, increased to over 72% during the early hours of Thursday.

This suggests that traders exchanged a considerable amount of USDT for USD Coin (USDC) and DAI stablecoins. The current state of Curve’s 3pool shows a holding of over $300 million in USDT, with approximately $55 million each in DAI and USDC. This imbalance indicates a growing preference for DAI and USDC over tether.

A similar trend was observed during Terra’s fall

Similar trends were observed during the Terra crisis in May and the FTX exchange collapse in November, as previously reported by CoinDesk. Paolo Arduino, the CTO of Tether, speculated in a tweet that some traders might be attempting to take advantage of the prevailing market sentiment, which has experienced a decline in the past 24 hours.

Arduino acknowledged the current edginess in the markets, noting that it creates opportunities for attackers to exploit the prevailing sentiment. However, he expressed Tether’s preparedness to handle such situations and emphasized their readiness to redeem any amount as required.

After the event, Tether’s USDT experienced a slight deviation from its usual 1:1 ratio with the US dollar on the Curve decentralized exchange. This resulted in a temporary opportunity for DeFi traders who are skilled in arbitrage.

The influx of USDT sellers overwhelmed the liquidity pools on Curve and Uniswap, leading to USDT briefly trading below its typical parity of $1.

As a response to the de-peg, market participants swiftly reacted by significantly increasing their borrowing of USDT from Aave, a leading decentralized lending and borrowing protocol.

Leave a Reply

Your email address will not be published. Required fields are marked *