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Cryptocurrency News Articles
Tether's Market Cap Sinks $1B, Raising Stability Concerns
May 10, 2024 at 01:00 am
Tether's market cap has plummeted by $1 billion, signaling potential distress. Crypto-analysts warn of an impending collapse, comparing it to the recent UST crisis. Investors have redeemed over $7 billion from Tether since the crypto market crash, leading to speculation that its dominance may be threatened by USDC.
Tether's Market Capitalization Plummets by $1 Billion, Prompting Concerns over Stability
Over the past 24 hours, Tether, the world's largest stablecoin, has experienced a significant decline in its market capitalization, shedding approximately $1 billion and dropping from $75.6 billion to $74.1 billion. This ongoing decrease has raised alarm bells among crypto-analysts, who fear that Tether may be facing an imminent collapse.
Crypto Whale, a prominent markets analyst, tweeted on Wednesday, "The implosion of tether is closer than ever. The eventual collapse of tether will eclipse the UST crisis by a thousand times."
In the aftermath of the Terra algorithmic stablecoin's spectacular collapse, Tether has witnessed a steep decline, falling from around $83 billion on May 11 to approximately $76 billion on Tuesday. This represents a significant redemption of over $7 billion by investors since the onset of the recent crypto market crash.
Despite the concerns, Tether Operations Limited, the entity responsible for Tether, has maintained that the withdrawals do not indicate a "run on the bank." Tether has consistently stated that it has always processed redemption requests at a rate of $1 for every Tether stablecoin.
As Tether redemptions continue, the market capitalization of its rival stablecoin, USDC, has increased by approximately $1 billion in the past 24 hours. This has been interpreted as a shift in investor sentiment, with a growing preference for USDC over Tether.
Speculation is rife that USDC may soon surpass Tether in terms of market capitalization rankings. Tether, however, has remained resolute in maintaining its peg to the dollar and has processed $7 billion in USDT redemptions for verified individuals since May 11.
The company has also sought to reassure investors that it possesses a liquid portfolio of assets to manage redemptions, even in scenarios resembling bank runs.
Tether has expressed confidence in its ability to maintain its peg to the dollar, arguing that it will remain stable "when other stablecoins fall." However, the recent volatility and concerns over redemptions have cast a shadow over Tether's stability and raised questions about the health of the crypto ecosystem as a whole.
The total cryptocurrency market capitalization has plunged to lows not seen since July 2021, when it reached $1.2 trillion. The current market capitalization stands at $1.3 trillion, significantly below its all-time high of $2.9 trillion recorded in November 2022.
Analysts are closely monitoring the situation, as the potential collapse of Tether could have far-reaching consequences for the crypto market.
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