Investors Continue on Dumping Tether (USDT) Despite Assurances by Company
Tether short sellers are on the rise despite the company’s repeated assurances that its reserves are fully backed. A so-called liquidity pool that allows traders to swap between the three biggest stablecoins still shows an elevated supply of Tether, with the token accounting for 65% of the total as of Friday.
This week saw a nearly $600 million decrease in Tether’s market value, bringing the total declines since right before TerraUSD’s meltdown to about $17 billion.
Company Eases Concerns
Since TerraUSD crashed, Tether Chief Technology Officer Paolo Ardoino has frequently used Twitter to reassure investors. In an effort to ease concerns about inadequate reserves, Ardoino stated that the company honored withdrawals totaling $10 billion after TerraUSD’s collapse. However, hedge funds have made significant bets on Tether’s value declining ever since.
1/I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. — Paolo Ardoino (@paoloardoino) June 27, 2022
Prior to the TerraUSD de-pegging event on May 6, Tether held a 29 percent stake in Curve Finance’s 3pool of tokens. On May 12, it increased to 82 percent, leading the stablecoin to momentarily lose its peg to the US dollar.
A Tether representative told Bloomberg that since USDT is a widely used and accessible stablecoin, it is common for many investors to retain their money in Tether and trade it for other assets.
On Curve’s 3pool, where traders can swap between Tether, USDC, and DAI, Tether’s share of supply stood at 29.9% on May 6, just before TerraUSD started deviating from its peg. That portion jumped as high as 82% on May 12 as the TerraUSD crisis worsened, briefly knocking Tether from its own peg.
While Tether’s share of supply has since declined, it remains far above pre-TerraUSD crisis levels. And it has reversed some of the decreases after the Journal report. The 3pool platform handled about $117 million in trading volume on Friday.Source