On Friday, Tether lost a whopping $800 million from its market capitalization, albeit in a questionable way. Although, the safety of stablecoins as a form of investment has recently become debatable, especially since the predicament that befell Terra’s UST some weeks ago. But while the price of Tether has also been steadily dropping since the Terra incident, Friday’s situation was particularly interesting.
The market cap of Tether suddenly dipped below the $70 billion mark where it has been hovering for long. At publication, USDT’s total market capitalization currently stands at $68.15 billion, per CoinMarketCap data.
Investors lose hope
Meanwhile, in the wake of the massive wipe-off that happened to the Tether market cap, investors are becoming increasingly worried about stablecoins in general.
According to a Twitter post by CryptoWhale, the possibility of stablecoins betraying the interests of investors appear to be unavoidable. That is, its failure is only a matter of ‘when” and not ‘if’.
CryptoWhale also added that all major exchanges could suddenly stop everything on their various platforms. He warned crypto holders to be wary of this possibility, that storing their assets on the exchanges comes at a risk. He wrote almost convincingly that:
“Anyone holding crypto on exchanges will be screwed. Expect all of the big ones to halt everything.”
As speculations overshadow Tether…
On Wednesday, there were rumours about Tether’s USDT being backed by Chinese or Asian commercial papers. Although, the firm immediately came out to put the rumours to bed, claiming they are “completely false.”
In their explanation, Tether confirms that the commercial papers account for just a tiny little fraction of the support reserves for the token. That is, less than a quarter. It then made a bold claim about the USDT reserves. Tether said, 47% of its reserves are being backed by the U.S. Treasuries.