Mon, June 05, 2023

Instability Across Major Stablecoin


Major stablecoins were volatile due to market volatility and increased redemptions. Almost all major stablecoins lost value against the US dollar during the FTX scandal but mostly recovered as the market stabilized. This week’s drop in cryptocurrency prices is just a symptom of the infection from FTX.

The stablecoins have been exposed to significant market volatility following the collapse of the FTX exchange this week, some of which will be temporarily removed. All major stablecoins experienced some volatility this week, according to CryptoQuant Chief Analyst Julio Moreno.

Will the Losses be Made Up For?

On November 10, Tether USDT, the world’s most popular stablecoin USDT, fell to $0.97, breaking the $600 million mark in the past two days. At the time of writing, USDT is still trading at $0.998. FTX and sibling business Alameda Research attempted to short USDT when the Tether de-pegging episode occurred.

Circle’s USD Coin has also not escaped the turbulence, with redemptions exceeding $1 billion. Yesterday, the stablecoin briefly fell to $0.977 before returning to its fixed price. Moreno stated that TrueUSD (TUSD) redemptions barely exceeded $1 million, but it didn’t stop a de-pegging to $0.98 yesterday. As redemptions passed $100 million, the Pax Dollar (USDP) stablecoin fell as low as $0.96. The Binance stablecoin, BinanceUSD (BUSD), experienced considerable volatility on the Gemini market and briefly fell below $0.98.

Tron’s algorithmic stablecoin USDD is currently trading at $0.973, well below the current price. Yesterday was the most volatile day at $0.952. Tron TRX, the currency used to exchange USDD, is down 12% since the start of the week, raising concerns about the collateral backing the stablecoin. Justin Sun additionally asserted that FTX and Alameda had shorted USDD. On November 10, many stablecoins left the FTX market, corresponding with the de-pegging occurrences.


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