The worlds largest stablecoin Tether briefly fell below par
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The world’s largest stablecoin Tether briefly fell below par

Tether, the world’s largest dollar-pegged cryptocurrency, fell to $0.95 the previous day but rallied half a day later to start trading at $0.998. The incident is related to the devaluation of TerraUSD, another stablecoin. Some traders decided to take advantage of Tether’s fall and made money from it.

    Image source: tether.to

Image source: tether.to

The fall in the price of the stablecoin Tether came after another dollar-pegged cryptocurrency, TerraUSD, fell to $0.30, raising fears that events would become a chain reaction in the future. However, the main difference with TerraUSD is that it is not backed by real money. However, Nicholas Bonnet, an analyst at cryptocurrency broker Aplo, said that some traders took advantage of the situation and started buying cheaper Tether tokens and exchanging them at face value.

In the world of cryptocurrencies, stablecoins are a kind of analogue of bank accounts, where investors can keep their funds in times of acute market volatility. Tether and USDC, the two largest stablecoins, are backed by real money held in reserve, which investors can exchange their digital assets for when they want to withdraw funds.

However, market participants have long expressed doubts that Tether, the company that issued the cryptocurrency, has enough assets to support token pegging to the dollar. Subsequently, with the participation of the Attorney General of New York State, it turned out that not only cash, but also securities were present in the Tether reserve. After that, the company began to reduce the shareholding in securities and promised to continue this line.

Tether CTO Paolo Ardoino responded to the incident by saying that cryptocurrency holders can always redeem their tokens at the price of $1. After the sudden drop in the price, the company has already bought $300 million worth of digital assets at the request of investors and is preparing to redeem them for another $2 billion, confirming their stability.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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