The LUNA/UST affair has caused discrepancies in the BTC-stablecoin trading pairs on different global cryptocurrency exchanges. Cryptocurrencies are still feeling the effects of the TerraUSD disaster, with markets continuing to suffer significant losses.
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While Tether (USDT) traded under $0.99, showing a sign of stress – Paolo Ardoino, Tether and Bitfinex’s chief technology officer, took to Twitter to assure people that 300 million UDST tokens had been redeemed at their $1 peg over 24 hours.
Reminder that tether is honouring USDt redemptions at 1$ via http://tether.to .
>300M redeemed in last 24h without a sweat drop.
The CTO of Tether has the assurance that the $1 peg remains strong despite recent events. He points out they’ve maintained stability through multiple black swan shifters and highly volatile markets, never refusing redemptions with them either.
Ardoino stated;
Tether continues to process redemptions normally amid some expected market panic following yesterday’s market. In spite of that, Tether has not and will not refuse redemptions to any of its customers, which has always been its practice.
When the market is uncertain, it can be hard to make decisions. Ardoino offered perspective about the technical differences between USDT and algorithmic stablecoins, which may have helped reduce some of the market’s fear, uncertainty, and doubt.
Unlike these algorithmic stablecoins, Tether holds a strong, conservative and liquid portfolio that consists of cash & cash equivalents, such as short-term treasury bills, money market funds and commercial paper holdings from A-2 and above rated issuers.
Ardoino believes that stablecoins will continue to be a vital cog in the cryptocurrency space, despite the Terra (LUNA)/UST situation causing some people to lose confidence in their ability to redeem token swaps for their $1.00 peg.
He said that he does not think people have lost trust in centralized stablecoins. On the contrary, he believes that people will always use them because they offer a way for traders to interact with the larger crypto ecosystem.
Stablecoin UST and LUNA collapse have sent shockwaves through the markets. However, customers could exchange LUNA for 1 UST or vice versa as the relationship was pretty straightforward.
When the price of UST fell below its $1.00 peg, a lot of people started trading it for LUNA. This was called arbitrage trading. People were burning UST to get $1.00 worth of LUNA, which they would then sell for a profit. But because so many people were doing this, the value of LUNA kept dropping.
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The Crypto Fear and Greed index measures how people feel about cryptocurrencies. It is in the “Extreme Fear” range, which means that investors aren’t feeling good about it.
Stablecoins have been a keystone for stability in the cryptocurrency world. Still, recent events such as 2020’s bumpy ride and LUNA/UST teamed up to affect other prominent US dollar-pegged coins.
Featured image from Flickr, and chart from Tradingview.com
Tags: crypto marketcryptocurrencyLUNAterra lunatetherUSDTust
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