Stablecoins lose dollar peg during FTX saga
Most stablecoins lost their dollar peg during the FTX saga, but have since recovered as markets have stabilized.
The recent plunge in cryptocurrency prices is just one of the many consequences of the FTX-induced crypto contagion. This week has seen a major sell-off in the crypto markets, with prices falling across the board.
This week's market volatility, caused by the collapse of the FTX exchange, has impacted stablecoins, with many of them de-pegging temporarily. This is a significant development that could have long-term implications for the stablecoin market.
It's been a volatile week for stablecoins, with nearly all of them experiencing some degree of peg volatility, according to CryptoQuant senior analyst Julio Moreno. This is likely due to the increased market volatility we've seen recently, as investors seek out safe haven assets in times of uncertainty.
The world's dominant stablecoin, Tether (USDT) declined to $0.97 on Nov. 10 as redemptions surpassed $600 million over the past two days, said an analyst.
As of right now, USDT is trading just below its peg at $0.998. This slight deviation from the peg is to be expected, and is not cause for concern. USDT remains a stable and reliable currency, and is still a great choice for those looking for a stable alternative to traditional fiat currencies.
There is clear evidence that FTX and Alameda Research were trying to manipulate the markets by artificially depressing the price of USDT. This is unacceptable behaviour and we call on the exchanges to take action to protect investors.
Crypto market volatility has gone up tremendously in the last few days amid the FTT/FTX downfall.
— Julio Moreno (@jjcmoreno) November 10, 2022
How are stablecoins doing in this environment?
Tether's price shortly declined to $0.97 today as redemptions surpass $600M in the last 2 days. pic.twitter.com/52eAtBs3NP
It's been a tough week for stablecoins, with Circle's USDC seeing redemptions topping $1 billion. The coin fell to $0.977 briefly yesterday but has since regained its peg, according to CoinGecko. While the overall market remains volatile, it's good to see USDC bouncing back quickly.
It's clear that stablecoins are still in their infancy, and that there are still a lot of kinks to be worked out. The recent drop in the value of TrueUSD shows that there is still a long way to go before these digital assets are truly stable. However, it's also clear that there is a lot of interest in stablecoins, and that they have the potential to revolutionize the way we store and transfer value.
It is interesting to see the Binance stablecoin, BUSD, experience some volatility on the Gemini exchange. While the dip to $0.98 was brief, it is a reminder that even stablecoins are not immune to fluctuations in the market.
It is evident that Tron's algorithmic USDD stablecoin is still struggling to maintain its peg, as it is currently trading at $0.973 according to CoinGecko. This is a significant drop from its peak value yesterday of $0.952, indicating that the volatility of the coin is still an issue.
There are concerns that the stablecoin USDD may not be backed by enough collateral, as the price of the TRX token has fallen by 12% this week. Justin Sun has accused FTX and Alameda of shorting USDD, which could further destabilize the coin.
It is unclear what caused the mass exodus of stablecoins from the FTX exchange on Nov. 10, but the timing of the event is suspicious. The de-pegging of these coins could have caused serious financial harm to investors and the exchange itself.
FTX Exchange (0x2faf) has resumed transfer out 1 hour ago.
— Lookonchain (@lookonchain) November 10, 2022
A total of 99 transfers were made, with $4,433,330 stablecoins.
Including:
28 transfers of $USDC, 3,985,236 $USDC in total.
22 transfers of $USDT, 325,569 $USDT in total.
3 transfers of $BUSD,122,526 $BUSD in total. pic.twitter.com/CdsSG1aWc9
It is good to see that the major stablecoins have returned to their dollar peg. This should help to ease fears of another collapse like we saw with Terra. Hopefully this will help to stabilize the market and encourage more people to invest in cryptocurrencies.
It is encouraging to see that the markets have recovered somewhat from yesterday's sharp decline. It is a reminder that, despite the short-term volatility, the overall trend is still positive. With a 5% gain in total capitalization, the markets are once again back over the $900 billion mark.
