Tether is fast becoming unpegged. Bitcoin prices surged 9% within hours as Tether (USTD) started sliding against its USD peg. Tether, commonly used as a “stable-coin”, is relatively close to the price of the USD due to its supposed 1:1 ratio of USTD/USD. Is this the collapse of Tether? This is what we know about tether.
We are witnessing two of the world’s most stable cryptocurrencies, Bitcoin and Tether, breaking out at the same time. Bitcoin is heading north into the green, while Tether has taken a tumble into the red in events that are closely linked. The entire cryptospace is abuzz with word and reports that the stablecoin has lost its ability to keep its peg.
Bitcoin has had a couple of months of barely moving, BTC due to it being trapped within a tight range, and USDT because that’s its job as a stablecoin. The last 24 hours has been surprising due to both of these coins, not one or the other, have made enormous moves. BTC began moving during the Asian session, around 2:00am EST, hitting $7500.00 per coin before settling around $6900.00. Tether slid to $.88, far from its $1.00 peg.
@Bitfinexed, a constant critic of Tether, tweeted “Watching tether die”. In the midst of this drama, Bitfinex issued a clarification, stating that fiat deposits, which had been put on hold, would be re-enabled by Tuesday, October 16th. Kucoin also halted USDT deposits and withdrawals due to “wallet system maintenance.”
So far, historically, this is what we know about Tether. USDT is closely tied to BitFinex, a global crypto exchange which lately has struggled to find and keep a banking partner. The amount of USD required to back USDT’s token supply were reportedly cause for hassles that has led to BitFinex not being able to keep a partner. Reports have come out stating that Tether has no money backing its total supply, which has led to many calling the stable-coin a scam.
The burning question remains: Does Tether have the funds to support its USDT supply or not? There’s only one way to find out, and that’s through a clear and transparent audit. But even on that front, the project has come short-handed. USDT’s actions go counter to what was in their original whitepaper – Tether has not conducted a proper financial audit. Instead, Tether hired a legal firm, which already had a working business relationship with Tether and Noble Bank, to perform an inspection.
Needless to say, BTC and USDT and their movements are closely correlated. Traders actively look to USDT for stability during times of BTC volatility. What do you think? Let us know on Facebook!
