USDT slipped to $0.96 on FTX but remained at $0.998 on Bitfinex.
Tether (USDT), BUSD, and USDC have maintained parity with the US Dollar even as Terra (UST) spirals downwards in an unprecedented fashion.
With UST prices crashing, LUNA also went into free fall. The unclear events surrounding the drop of UST caused a downturn in market prices. Widespread expectations were that other stablecoins would likewise be affected. However, this has not been the case.
Despite the market crash, USDT investors have been able to redeem one USDT at $1. According to Tether CTO Pablo Ardoino, this is made possible by the assets backing the stablecoin. Ardoino stated that Tether had already redeemed over $300 million in 24 hours. He also expressed confidence that the company would continue to do so without breaking a sweat.
He said:
“In spite of that, Tether has not and will not refuse redemptions to any of its verified customers, which has always been its practise.”
He further pointed out that the firm was already processing another $1 billion for redemption.
Despite the assurances, USDT slipped to $0.96 on FTX but remained at $0.998 on Bitfinex. Comparatively, Binance USD (BUSD) and USD Coin (USDC) were trading at $1.08 and $1.09 on Binance.
Collateralized Stablecoins Will Maintain Dollar Parity
However, several crypto experts have expressed their confidence in stablecoins. These experts believe that asset-backed stablecoins will maintain dollar parity.
Brad Yasar, CEO of DeFi platform EQIFI, noted that algorithmic assets are prone to market fluctuations because they are not asset-backed. He said, “The asset-backed stablecoins – as long as their reserves match the number of coins in circulation – are not prone to de-pegging by market movements.”
In a similar vein, Gabor Gurbacs, director of digital-asset strategy at VanEck noted there was no basis to compare USDT and UST. He asserted that Bitcoin and USDT remain the most reliable reserve assets in the crypto ecosystem.
On his part, Trakx crypto economist, Ryan Shea, noted that a shift was imminent. He said that the price drop will cause a shift from algorithmic stablecoins to asset-backed stablecoins. Shea believes that the drop will benefit collateralized stablecoins like USDT and BUSD rather than affect them negatively.
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