The largest stablecoin by market capitalization, Tether (USDT), has just fallen below its dollar peg.
At press time, the asset is trading at $0.996.
Tether's CTO Paolo Ardoino was quick to take to Twitter, saying that "markets are edgy in these days" and adding that the popular stablecoin is "ready as always."
Markets are edgy in these days, so it's easy for attackers to capitalize on this general sentiment. But at Tether we're ready as always. Let them come. We're ready to redeem any amount.
He also said the firm is ready to redeem for anyone interested, referring to holders' ability to swap the USDT token for the underlying dollar it represents. "Let them come," he said.
USDT's dollar-backing has been a key sticking point for the firm over the years, with critics alleging that Tether does not actually have all the money it claims.
Tether has attempted to quell these concerns with regular assurance reports from the accounting firm BDO Italia. The company indicated in its latest report that most of its reserves were held in cash and cash equivalents, with the majority “invested in U.S. Treasury Bills.” Only 1.8% was held in Bitcoin.
Unlike Bitcoin or Ethereum, stablecoins like USDT are pegged to a fiat currency, such as the dollar or British pound. They provide a convenient, low-volatility asset for traders looking to exit more volatile cryptocurrencies.
Naturally, though, if these assets lose their peg to their fiat counterpart, it can stir fears in the market.
Tether did not immediately respond to Decrypt's request for comment.
Tether and the '3 Pool'
Analysts havealsopointed to Curve Finance's famed 3pool for further indications of investor sentiment.
Curve Finance is a popular decentralized exchange that lets users swap between like-assets. The 3pool, for example, is the project's largest pool of assets and is composed of the three largest stablecoins: USDT, Circle's USDC, and Maker's decentralized DAI.
Each asset is dollar-pegged, offering investors an arbitrage trade between all three should any of them lose their peg to the up- or downside.
The USDT pool composition percentage has now reached 61% which is absurdly high.
Someone moving like they know something inflows over the last 24 hours are abnormal.
Currently, with the amount of USDT moving into the pool (and USDC and DAI moving out), investors are clearly signaling their interest in exiting Tether's stablecoin.
In fact, the majority of the pool is currently composed of USDT (73%), a percentage that hasn't been seen since November 2022, when Sam Bankman-Fried's crypto exchange FTX filed for bankruptcy.
"By looking on-chain, we can see the selloff is mainly speculative and triggered by arbitrage and short selling of Tether on decentralized exchanges and lending marketplaces," research analyst at 21Shares Tom Wan told Decrypt. "There is no apparent root cause at the moment. USDT’s liquidity in Curve 3Pool seems to have stabilized at around 70% since Tether’s CTO mentioned that they are ready to redeem any amount."
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
The share prices of crypto-focused companies jumped this week amid the wider market upturn that sent Bitcoin to multiple all-time highs and despite a lull on Friday in equity indexes.
Coinbase and Strategy both rose about 9% and 12%, respectively, over the past five days, according to Yahoo Finance data. Stock and crypto trading platform Robinhood climbed 5%. The stock prices of major Bitcoin miners also spiked with MARA Holdings soaring about 12%.
Those gains have come as Bitcoin rose above $11...
Consumer products company Upexi is bolstering its Solana treasury, raising $200 million to fund business operations as well as further SOL purchases, it announced on Friday.
The funds will come from two separate financing vehicles, with $50 million in net proceeds expected via an equity offering and $150 million from the sale of convertible notes. Each offering is expected to close next week.
“Today, we announced a blockbuster deal with a $150 million in kind convertible note led by Big Brain...
Public Keys is a weekly roundup from Decrypt that tracks the key publicly traded crypto companies.
This week: CoreWeave and Core Scientific plan to make it official, Bitcoin ETFs are booming, a BTC and Dogecoin miner embraces Solana, and Bitcoin's biggest treasury holder takes a week off from the buying grind.
Core fusion dance
Bitcoin miner Core Scientific and newly public AI powerhouse CoreWeave have decided to do the fusion dance in a staggering $9 billion all-stock transaction.
Unfortunately...