The USDT stable coin got itself back up just as Tether’s CTO Paolo Ardoino assured investors that the peg was not broken. The assurance came through a Twitter Space session with Ardoino on Thursday. He also confirmed that Tether has no issues with redemptions, including the $600 million reimbursements during his hour-long address.
Last week has been tumultuous in the larger cryptocurrency market as Bitcoin and Ethereum are already 50% down from their all-time high. However, that is not everything the market had to tackle. In a surprising event, Terra’s UST stablecoin fell to the deepest depths and lost around 90% of its value in the last few days.
Following the UST stablecoin, Tether’s USDT, the largest stablecoin by market value, faced market downtime. As per the reports, the peg fell as low as $94.55, the lowest the coin fell since December 2022. Panic ensued in the USDT community as the peg was thought to be broken.
However, Tether was soon enough to respond, and the CTO confirmed that the private firm behind USDT still honors the redemptions, and there is no way the peg can be broken. He added that the peg would be broken if the redemptions were not honored at $1.
Just as the CTO mentioned, Tether got back up as soon as the session of Twitter Spaces ended. Tether’s sump caused such an uproar because it has excellent market volume, and more than half of Bitcoins are bought using USDT, as per the reports from CryptoCompare.
Much of the commotion owes a great deal to the nascent Terra UST stablecoin. With Terra falling, many began anticipating USDT fall and new users who confused Tether for the former. Given that Bitcoin has lost about 20% in just a week, there were enough reasons to fuel this short downtime for USDT in the market.
Ardoino clarified the confusion by saying that Tether keeps more than 50% of its reserves in the US Treasury. Meanwhile, Terra is an algorithm-based stablecoin that expects the market to stabilize itself. Moreover, Terra’s reserves mainly comprise Bitcoin, and any impact on BTC is likely to hit the value of UST.
Furthermore, Terra does not have any utilities except for Yield Farming, as one cannot use it for payments or trading. Ardoino also believes that UST was created to boost the price of LUNA by incentivizing the users, and it seems to have reached the end of the line.