Is Tether in danger before the collapse of UST?

The collapse of TerraUSD dragged down the market, which lost its parity with the dollar and sank 80%. How is the outlook for USDT and the other stablecoins

TerraUSD (UST) It is one of the cryptocurrencies of the moment, although not precisely because of a positive factor.

The stablecoin lost its parity with the dollar, a fact for which several exchanges suspended operations with this crypto on their platform, along with its “sister” crypto MOONboth belonging to Terraform Labs.

The collapse of this cryptocurrency strongly dragged the market in general, but particularly that of stable currencies, which is why investors of all kinds make massive withdrawals from these assets, fearing a new “terra case”.

Cryptocurrencies suffered a resounding decline fueled by the UST disparity with the dollar and the LUNA crash

Tether and stablecoins, in danger?

Tether (USDT)considered the main stablecoin in the sector, looks askance at what happens with TerraUSD.

In fact, the panorama seems to be complicated for the project since the whales sold a total of $710 million in USDT in the last 24 hours alone, for fear of one decoupling with the dollarjust like what happened with UST.

On-chain data shows that key whale addresses sold the largest dump of USDT in a single trading day in directions of these players. At the moment, no data was provided about the network to which these addresses were related.

Also, after the “black monday” that the crypto market experiencedEven the most trusted assets in the ecosystem reported massive withdrawals from exchanges and decentralized smart contracts.

Tether (USDT), the main stablecoin, also suffers the fall with withdrawals of funds of up to $710 billion

Tether (USDT), the main stablecoin, also suffers the fall with withdrawals of funds of up to $710 billion

Is it safe to hold reserves in Tether?

Unlike UST, which maintains a distinct algorithmic system to maintain parity with other assets, Tether maintains parity with the USD.

Tether is a stablecoin issued by a Hong Kong-based company called Tether Limitedwhich supports its issuance in a series of digital assets such as:

  • Cash
  • Bank deposits
  • Treasure letters
  • secured loans
  • Deposit certificates
  • Reverse Repurchase Notes
  • corporate bonds
  • Money
  • Precious metals

Many analysts noted that the Diversification appears as the main factor for the USDT to maintain greater stability compared to other stablecoins with more volatile backing systems.

Still, Tether dipped as low as $0.95 on Thursday, May 12, but quickly regained its footing and is back close to $1.00, according to data from CoinMarketCap.

tether holds

Tether maintains its liquidity from the diversification of its assets

When and how did Tether come about?

The creation of USDT began to take shape in 2014 with an idea from JR Willet, known in the world of cryptocurrencies as “The man who created ICOs”.

In the year 2014, Willet worked at Mastercoina blockchain that served as a communications protocol running on Bitcoinwhich was a revolution for Bitcoin and opened the doors for new applications and features.

In the development of Mastercoin, they were Brock Pierce and Craig Sellarswho in the same year launched Realcoin using the omni layer protocol. The appearance of Realcoin would be one of the biggest projects carried out on Omni at that time.

However, on November 20, 2014, the CEO of TetherReeve Collins, announced the name change to Tether, as it is known today.

The intention behind Tether is that it can be used as “digital dollar” since it is based on the US dollar (USD), so the value of a Tether coin will also correspond to the exchange rate of one dollar.

Tether (USDT) is a stablecoin issued by a Hong Kong-based company called Tether Limited.

Tether (USDT) is a stablecoin issued by a Hong Kong-based company called Tether Limited.

Advantages of using USDT

USDT has the natural advantages of cryptocurrencies: it does not set limits for its transfers and can be sent anywhere in the world quickly and at a low cost per transaction. It is stable: this is because its value remains tied to the value of the dollar.

if you want invest in Tether it only requires a few simple steps:

  • The user deposits a certain amount of dollars in the bank account of the company Tether Limited
  • Tether Limited generates and credits the USDT tokens to the user’s account. These are created in a 1:1 relationship with respect to the deposit made
  • USDT funds are activated to be able to use them like any cryptocurrency
  • To exchange your USDT tokens for US dollars, you must deposit them into Tether Limited accounts
  • Tether Limited destroys USDT tokens and sends fiat currency to user’s bank account
  • To handle the transactions you need a digital or physical wallet as with any other cryptocurrency.
USDT is emerging as an interesting option for investors

USDT is emerging as an interesting option for investors

Thus, being directly pegged to the dollar it is possible to know its real value at all times.


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