The market value of USDT has evaporated by more than 15.6 billion US dollars! USDC bucked the trend and innovated as high as $55.9 billion

After the collapse of LUNA in May, the overall cryptocurrency market started a series of stampedes. BTC recently fell below the key water level of 20,000 US dollars. With such drastic fluctuations, even after more than two years, the market value almost showed a gradual rise. The stablecoin leader USDT also began to plummet.

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According to CoinMarketCap data, the market value of USDT has risen from a high of US$83.17 billion in early May. In about 40 days, the market value of USDT has evaporated by more than US$15.6 billion, and it is now quoted at about US$67.4 billion, a record high since September 2021. minimum level.

Note: In June 2020, the market value of USDT was about 9 billion US dollars, which has increased by more than 9 times from the historical high in May this year.

Losing faith in stablecoins? Tether: We are nothing like Terra

Regarding the reasons for the rapid decline in the market value of USDT, analysts have judged that in addition to the recent US Federal Reserve (Fed) accelerated monetary tightening policy, which has led to violent fluctuations in the venture capital market, investors exchanged assets for insurance in USD cash; UST overnight The crash has greatly reduced users’ confidence in stablecoins, and worries that USDT may collapse due to a run is also one of the main reasons.

In response to this situation, Tether’s technical chief may not want the rapid decline in market value to cause investors to panic on the evening of yesterday (20), tweeting: “For reference: Due to past redemptions, Tether is destroying the tokens in the treasury. . Tokens in the treasury are not considered issued, they are regularly burned. Current burn: – 6.6B on TRC20 – 4.5B on ERC20.”

Tether officials also issued a document in late May: USDT and Terra are completely different in design, mechanism and collateral. Terra is an algorithmic stable coin, backed by cryptocurrencies such as LUNA; relatively speaking, each USDT is backed by complete collateral. When the USDT price on the exchange is not equal to 1 USD, it can only indicate the user’s interest in liquidity. Demand surpassing the exchange’s order book does not mean USDT is decoupling.

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Tether emphasized that it has enough collateral for redemption of USDT, which can meet the liquidity needs of users, and said that Tether has successfully passed the stress test in the face of redemption of $10 billion in a short period of time, proving their strength.

“Some critics have tried to suggest that Tether’s processing of $10 billion in redemptions is a sign of weakness, but it actually shows that Tether is able to redeem over 10% of outstanding USD token requests in a matter of days. There is hardly a bank in the world Be able to process withdrawal requests for 10% of their assets in the same amount of time, let alone days.”

In Tether’s latest report, more than 55% of USDT’s reserves are U.S. Treasury bonds, and commercial paper accounts for less than 29%.

USDC market cap hits a new high against the trend

It is also worth noting that the market value of USDC, the second-in-command of the stablecoin market, not only did not decline in the recent market crash, but instead reached a record high against the trend, currently reaching about $55.9 billion.

As for why investors choose to redeem USDT instead of USDC? Jun Yu, the co-founder of ANT Capital, recently commented that it is related to the difference in the asset reserves of the two companies and the transparency report: this is because the proportion of cash in the USDC reserve assets is as high as 60%, and the audit report is released once a month, while USDT’s audit report is only released quarterly.

But overall, Jun Yu said that USDT is generally safe, although there are still some risks; and the safest stable currency asset is USDC.

This is a positive for cryptocurrencies. In addition, the recent market value of cryptocurrencies and the market price of mining machines are at historically low levels. Interested investors can consider entering the market slowly.


Post time: Aug-12-2022