Tether (USDT), the largest stablecoin, slipped below $0.96 early Thursday in a further sign of tension in the crypto market.
The token fell to a 24-hour low of $0.956 on FTX at 3:15 a.m. ET. On Bitfinex, USDT is trading at $0.998. Bitfinex and the stablecoin Tether are subsidiaries of the same parent company.
Over the past few days, TerraUSD (UST) – an algorithmic stablecoin native to Terra that is supposed to follow the price of the US dollar – has gone off the rails dramatically.
It is unclear at this time what is driving the market event, although widespread fears over continued market turbulence, spurred by the market crash of both the UST and the native Terra asset , LUNA, have affected crypto prices in recent days. Bitcoin is currently trading at around $25,800 on Coinbase, according to data from TradingView.
Other stablecoins in the market are trading at a premium to USDT at press time. Binance USD (BUSD) and USD Coin (USDC) are trading at $1.08 and $1.09 respectively via trading pairs on Binance.
Unlike UST, USDT is backed by a pool of invested assets, and investors are supposed to be able to redeem USDT for $1 at any time.
Paolo Ardoino, CTO of Tether, had tweeted his confidence earlier today, saying the stablecoin operator was “honouring redemptions of USDt at $1” and that over $300 million had been redeemed in the past 24 hours. “without a drop of sweat”.
Contacted by The Block for further comment on Thursday, Ardoino said in a statement:
“Tether continues to process redemptions as normal amid some market panic expected after yesterday’s market. Despite this, Tether has not and will not deny redemptions to any of its verified customers, which has always been its practice. In the past 24 hours alone, Tether has honored over 300 million USD in redemptions and is already processing 1 billion more so far today without issue.”
“On Bitfinex the Tether peg is >$1 while on Kraken it is slightly below $1,” Ardoino continued. “This led to arbitrageurs buying USDt cheaply on Kraken and reselling it on Bitfinex for profit. While other market makers bought USDt
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