The most controversial stablecoin has once again caused a huge stir in the crypto world. Tether has redeemed 500 million USDT and burned them, leaving a mere 446 million USDT left in the treasury account. The problem occurs from the fact that Tether redeemed these USDT at a time where the price was well below $1 – around $0.91 – and by burning them it will help stabilize its price and inflate it to just over $1. This adds further fuel to the fire and claims that Tether has been used for price manipulation of Bitcoin and other cryptos during the 2017 bull run.
Tether’s Troubled Past
Tether quickly rose to fame as the most popular stablecoin available in the crypto world. It’s allegedly pegged to the USD at a ratio of 1:1, meaning that for every USDT in circulation, it held 1 USD in a bank account somewhere. However, this came into question during the December 2017 bull run and the crypto world started linking USDT issuance to a price rise in Bitcoin. Given the fact that its USD balance is still as clear as mud – and that every time more USDTs were issued the price of Bitcoin rose – it’s not surprising that critics were quick to slam the stablecoin.
Preparing for the End of Tether’s Reign
Tether has long reigned as the ultimate stablecoin, but it appears as if it’s now on its way out. Recently, the price of Tether fell well below its alleged 1:1 peg with the USD. Usually when crypto markets fall USDT rises slightly above $1, but this time the opposite happened. Tether fell with the wider crypto markets, meaning traders no longer see it as a safe haven during times of volatility. This combined with the recent Bitfinex insolvency accusations have caused Tether to teeter and begin its slow death march to the crypto graveyard.
Exchanges Preparing for the Inevitable
With 52% of all USDT being burnt in a single day, crypto exchanges have been quick to prepare for the inevitable. OKEx has recently listed four stablecoins for crypto traders to use in times of volatility. This new addition to its trading platform will help keep investors going even if Tether finally kicks the bucket. In addition to this, Coinbase has teamed up with Circle to develop and list a new USD stablecoin as well. It appears as if crypto exchanges have lost all faith in Tether.
It’s only a matter of time before Tether is just a distant memory and its founders are arraigned before the US Securities and Exchange Commission. If Tether does fall short, its founders will have a lot of questions to answer. Thankfully, crypto exchanges around the globe are preparing for the inevitable event and listing new stablecoins as we speak.