- Tether price has held quite well recently.
- There are concerns about de-pegging of the stablecoin.
The Tether price has been on edge in the past few days as concerns about dollar de-pegging continues. USDT is trading at $0.9980, which is slightly below the peg level at $1. Its total market cap has moved to more than $75 billion, making it the third biggest cryptocurrency in the world.
Concerns about Tether
Tether is one of the most important cryptocurrencies in the world. It is the stablecoin of choice among people who want to trade cryptocurrencies. It is mostly beloved because of the fact that it is pegged to stable assets like the US dollar and government bonds.
According to the Financial Times, Tether lost about $7 billion of value since the coin briefly lost its peg against the US dollar. The coin’s value has fallen by about 9% from May 12.
There have been a lot of concerns about Tether and other stablecoins in the past few weeks. The biggest concern is the recent collapse of Terra UST, a stablecoin that crashed last week.
Concerns about Tether have lasted for much longer. One of the biggest issues is that Tether claims to be backed by US dollar on a 1:1 basis. However, a closer look at its financials show that the stablecoin’s assets are backed by other assets like commercial paper and government bonds.
Learn more about how to buy Tether.
Tether’s management argues that these investments are necessary because of their safe ratings. At the same time, the investments help to generate income for the developers. Most importantly, the developers note that users can readily redeem their coins at any time.
Still, many people believe that stablecoins should be regulated further. For one, unlike in a bank account, these funds are not insured by any agency. As such, people who held Terra USD have seen their investments disappear just like that.
USDT price prediction
The daily chart shows that the USDT price has been stable after it lost its peg briefly last week. Nonetheless, the coin has remained below the parity level of $1 for sometime as investors rotate to other stablecoins like Maker’s Dai and Circle’s USD Coin.
At this stage, there is a likelihood that the Tether price will remain at the current range unless something major happens. It is also worth noting that Tether and UST use fundamentally different technology. While Tether is backed by real assets, Terra USD was algorithmic in nature.
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