August 10, 2022

The crypto ecosystem remains to be coping with the fallout brought on by the collapse of the Terra ecosystem, the corporate behind stablecoin USDT, Tether, is being focused by hedge funds. Confirmed by Paolo Ardoino, CTO at Tether and crypto trade Bitfinex, through his Twitter account.

Associated Studying | Cardano Shaped This Sample On Its Chart, The place Is The Coin Headed?

In accordance with the rumors, hedge funds have been opening brief positions on Tether (USDT) and have been actively in search of to create panic within the crypto trade to have an effect on the stablecoin. Peg 1:1 to the worth of the U.S. greenback, these entities is perhaps making an attempt to copy the occasions that crash LUNA and UST.

These digital belongings have been on the epicenter of the Terra ecosystem, the latter operated as an algorithmic stablecoin pegged to the U.S. {dollars} till it crashed shedding over 90% of its worth. According to Ardoino, hedge funds would possibly attempt to revenue by creating the circumstances for the same crash with USDT:

I’ve been open concerning the makes an attempt from some hedge funds that have been making an attempt to trigger additional panic in the marketplace after TERRA/LUNA collapse. It actually appeared from the start a coordinated assault, with a brand new wave of FUD, troll armies, clowns and so forth.

The result can be totally different, as Tether’s CTO defined, these hedge funds would allegedly attempt to set off a large capital outflow from the stablecoin and destabilize its value. Finally, if the worth of USDT drops, the brief gamers would “purchase again tokens at a a lot cheaper price”.

See also  Panic Vs Pandemic: Crypto Market Is Extra Fearful Than On Black Thursday

These entities, Ardoino mentioned, have been allegedly spreading Concern, Uncertainty, and Doubt (FUD) on the stablecoin, such because the rumors that declare Tether will not be 100% backed by actual belongings, and that it was uncovered to fail investments. The Tether CTO denied as soon as once more denied the rumors:

Tether had/has in reality >= 100% of the backing, by no means failed a redemption and all USDt are redeemed at 1$. In 48 hours Tether processed 7B in redemptions, averaging 10% of our whole belongings, one thing nearly unimaginable even for banking establishments.

Crypto whole market cap tendencies to the draw back on the 4-hour chart. Supply: Tradingview

Can Tether Observe LUNA/UST And Lose Its Pegged?

In that sense, Ardoino put into query the “billions” briefly positions taken by these hedge funds. The chief claims USDT is a battle-tested stablecoin that has outlasted a number of crypto bear markets, and even corporations thought-about “the holy heroes of our trade”.

As Bitcoin and the crypto market development to the draw back, Tether’s (USDT) whole market capitalization noticed an nearly 20% drop. Nevertheless, the stablecoin operates with a really totally different mechanism than that of Terra’s LUNA-UST and appears unlikely to observe the identical path.

USDT has at all times prompted controversy in house, nevertheless it has operated for nearly a decade. The corporate behind the stablecoin has been enhancing on its authorities contacts, its transparency, and including extra belongings to again USDT.

Associated Studying | TA: Bitcoin Dips May Be Restricted, Why 100 SMA Is The Key

As a pseudonym analyst mentioned on Twitter, this doesn’t imply the stablecoin might by no means fail, nevertheless it does appear to counsel the “FUD on USDT appears overrated”.