Due to discrepancies in BTC-stablecoin trading pairs across different global cryptocurrency exchanges, the LUNA/UST matter has been a source of confusion. Cryptocurrencies continue to feel the devastating effects of TerraUSD, as markets suffer massive 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 TwitterTo assure the public that over 300 million UDST tokens were redeemed at $1 per unit within 24 hours
Remember that USDt redemptions can be made at 1$ by visiting http://tether.to
>300M redeemed in last 24h without a sweat drop.
Tether’s CTO, Tether, has stated that they are confident the $1 peg is strong regardless of the 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. Tether will continue to honor its tradition of offering redemptions to its customers despite this.
Differentialities between USDT and Algorithmic Stablecoins
It can be difficult to take decisions when the market is in uncertainty. 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 is convinced that stablecoins are still a key component of the cryptocurrency market, despite Terra (LUNA/UST) causing some people lose faith in their ability redeem token swaps to get their $1.00 peg.
According to him, he doesn’t believe people have lost faith in central stablecoins. He says that they are still used because it allows traders to connect with other crypto-economy members.
Stablecoin UST, and LUNA collapsing have sent shockwaves through markets. Customers were able to exchange LUNA and 1 UST for one, as it was a simple relationship.
A lot of people traded UST to get LUNA after the price dropped below its $1.00 peg. This is known as arbitrage trading. For $1.00 of LUNA worth, people were willing to burn UST in order to make a profit. Because so many were doing it, LUNA’s value kept falling.
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This index tracks how people perceive cryptocurrencies. It is in the “Extreme Fear” range, which means that investors aren’t feeling good about it.
The stability of the crypto world has been made possible by stablecoins. 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