The recent price drop in cryptocurrencies has caused even stablecoins to lose some of their value, which has begged the question how are stablecoins such as Tether (USDT) to be trusted.
The dollar-pegged cryptocurrency saw a steady decrease in its value, after half of the crypto market was sold off over the past few days. More than $1.2 trillion of the market value has been exchanged back into fiat currencies.
Another stablecoin, TerraUSD, also saw a consistent loss in value. On Thursday, TerraUSD was trading back at 47 US cents after falling to 31 US cents a day before.
Commenting on the falling values, BCB Group head of OTC trading Richard Usher said: “The collapse of the peg in TerraUSD has had some nasty and predictable spillovers. We have seen broad liquidation in BTC, ETH and most ALT coins.”
The same went for USDT which dropped to 95 US cents on Thursday, even though the currency has been trading at 1:1 to the US dollar for years.
While the drops in pricing in TerraUSD can be attributed to the currency being fairly new and lacking the confidence other stablecoins do, USDT is a different animal altogether.
The ecosystem has been around for a while, and it has inspired sufficient trust to be seen as the best example of the stablecoin ecosystem.