Tether, a $ 74 billion stablecoin issued by Tether Holdings Limited, has been scrutinized more and more since the collapse of the agolistmic stablecoin terrUSD, which partially caused a $ 1 trillion bitcoin, Ethereum and cryptocurrency crash. (More pain is believed to be ongoing).
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Bitcoin prices fell to a low that hasn’t been seen since the start of the cryptocurrency surge in late 2020 last week. It fell about 50% from the all-time high of about $ 70,000 per Bitcoin in November. Meanwhile, Ethereum and other smaller cryptocurrencies have been hit by even steeper sellouts as panic suddenly spread to NFTs.
Currently, Barclays strategists have warned Tether that they have enough US dollar and dollar-equivalent asset reserves to maintain a one-to-one peg. The price goes down even further. “
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Tether holders can exchange tethers for companies or sell them to other traders in the secondary market.
However, Barclays analyst Joe Abate pointed out a lesser-known warning introduced by Tether Holdings to prevent a sudden spill. Pay a tether and a 0.1% withdrawal fee.
“The liquidity of tokens such as tether seems to be directional sensitive,” Abate said. BloombergA price cascading can occur, explaining how owners are in a hurry to offload tether in the event of a Bitcoin and cryptocurrency crash.
“When the price of crypto assets rises, it’s easy to sell stablecoin because there are a lot of enthusiastic buyers ready to get equal tokens, but others, such as March 17, 2020. As the price of crypto assets drops, this liquidity runs out rapidly. In the case of tethers, the pressure to sell increases due to the inability of most investors to redeem directly and the benefits of their unique pioneers. : Sell tokens quickly before prices drop further. “
Tether’s secondary market exchange rate fell to 95 cents last week, almost recovering, according to CoinMarketCap data, but still just under $ 1 as traders rushed out due to the Bitcoin and crypto market plunge. It is below.
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“Tether does not make this easy or cheap by charging a redemption fee and imposing a minimum flat withdrawal amount,” Abate wrote. At the best price possible.
Berkeley’s warning is issued when Tether Holdings publishes a report detailing its assets through the first quarter of 2022. The report, compiled by independent audit firm MHA Cayman, shows that Tether Holding’s consolidated assets exceeded consolidated liabilities at the end of March. It suggests that the tether is fully backed up.
“Last week was a clear example of Tether’s strength and resilience,” wrote Paolo Aldoino, chief technology officer of Tether Holding, an executive at major crypto exchange Bitfinex, in a blog post.
“This latest proof further emphasizes that tether is fully backed and its reserves composition is strong, conservative and fluid.”