Stable No More? Tether (USDT) Struggling to Keep up with USD
Stablecoins are meant to be the safer options in a highly volatile cryptocurrency market. However, the biggest stablecoin among them—for just a moment—lost its footing.
The price of Tether (USDT) on November 14 to 15 went as high as US$1.03 and as low as US$0.98. At the same time, daily transaction volumes involving USDT reached as high as US$5.7 billion.
Tether is crashing today too pic.twitter.com/Kk2vWHrhU3
— David Gerard (@davidgerard) November 14, 2018
That price movement—accompanied by a huge transaction volume—would be a normal occurrence on most cryptos, given their volatile nature. However, that was not the case for USDT. In fact, it should never be.
Stablecoins are digital coins that are meant to be the digital alternatives to fiat money. Cryptos under this type of digital assets have their prices pegged to those of their fiat counterparts. This structure reflected well on crypto price trackers, where the line showing a stablecoin and fiat trading pair remains flat.
On the short window mentioned above, however, tracking websites showed that the USDT price moved more dramatically than usual. That moment was the first in weeks for Tether, stretching back to October 15 when the USDT also deviated from USD.
A StAbLeCoIn iS a cRyPtOcUrReNcY DeSiGnEd tO MiNiMiZe tHe pRiCe vOlATiLitY. pic.twitter.com/J37nv9kWA2
— Merijn Nijhuis (@Merijnnij) November 14, 2018
— Robert Muncaster (@b_muncaster) November 14, 2018
The Tether team claimed that each USDT token circulating on the market is backed piece by piece by the US dollar in the project’s reserve account. USDT is the largest stablecoin in the scene with a market capitalization of over US$1.7 billion, the eighth highest among all cryptos.
USDT can be traded for crypto or fiat currencies on multiple exchange platforms. Some of them include Bitfinex, Okex, Coinbene, Binance, Huobi, and DigiFinex, among others.