USDT, a stablecoin created by Tether with a value tied to the USD lost value against the fiat currency momentarily due to its change of weight in the stablecoin market. The price of USDT fell by 0.3% to around 0.997 while its weightage in the curve 3pool increased to over 70% from the usual 33.1%. The Curve 3pool consists of three stablecoins including USDT, USD Coin, and Dai.
A major investor under the name of CZSamSun made a profit of $1.3 million by putting stETH and $ETH into Aave and Instadapp. Twenty minutes later, another whale address invested 52,200 staked Ether (stETH) through Aave v2 and mortgaged 52,200 staked Ether (stETH) through Aave v2.
The second transaction resulted in the USDC/USDT trading pair increasing in value on Binance to a new high of the year of $1.0034. While the sudden changes in the value of the USDT sparked fear in the crypto market for the increased potential of the stablecoin’s volatility, Tether CTO Paolo Ardoino took to Twitter to counteract the scare by posting a meme. The tweet directly addressed the FUD scare, which resulted in rumors surrounding the USDT depeg.
This is the second depeg to occur within a matter of months. The previous depeg sent aftershocks across the market, leading investors’ portfolios to take a serious hit. The previous depeg happened when Circle announced that it had around $3.3 billion that were stuck in the Silicon Valley Bank during the FTX crisis. Although Circle managed to regain stable capital within two days, the market panic caused many investors to liquidate their USDC token, causing the stablecoin to drop in value to $0.90.
USDT creator Tether was also reported to mint $1 billion this week on the Ethereum blockchain merely months after their last minting of another $1 billion. In total, Tether has minted $16 billion since the start of 2023. The company’s capitalization is $83 billion. However, stakeholders worry about whether the company maintains enough liquidity to cover customer demands. Ardoino once again tweeted to reassure investors that the latest minting was to preserve liquidity, citing this amount will be used as inventory for next period issuance requests and chain swaps.”
Some have expressed their concern regarding the future of USDT and Tether, should they be subjected to the same legal scrutiny crypto exchanges, such as Binance, have been facing. Crypto experts claim that an SEC lawsuit against Tether would be going “straight for the jugular and starve[ing] crypto of its liquidity’.