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Can Tether Maintain Its 1:1 Peg Against the U.S. Dollar?

A new wave of doubt and concern has hit the crypto markets this last week. The problem this time is USD-Tether (USDT), a digital asset or stablecoin pegged to the dollar at a 1:1 ratio (supposedly).

While currently trading at an average of $0.96, credibility around Tether is at all-time lows. Failing to maintain its peg against the U.S. dollar, it has slipped down as much as 10% on some exchanges, signaling growing concerns and prompting traders to diversify to other stablecoins or cryptocurrencies.

New Regulated StableCoins Will Likely Replace USD-Tether3

Source: https://twitter.com/Crypto_Macro/status/1051719338468790274/photo/1

Other recent red flags include Tether & Bitfinex desperately trying to convince the sector it is not insolvent, with other information circulating about the location of Tether’s reserves and news of Noble Bank and potentially HSBC refusing to service Bitfinex and Tether, the amount of distrust has only intensified amongst the market and wider crypto community.

New Regulated StableCoins Will Likely Replace USD-Tether4

Source: https://twitter.com/BennettTomlin/status/1049496326059233280

New Regulated StableCoins Will Likely Replace USD-Tether4

Cryptocurrencies are performing strongly against USD-Tether as it struggles to maintain its 1:1 ratio against the US Dollar.

https://www.ccn.com/whats-causing-2-bitcoin-premium-on-bitfinex-possibility-of-arbitrage/

Lack of Trust in Tether is Nothing New…

It’s nothing new that the markets are skeptical about Tether. Late last year, it claimed it was the victim of a theft resulting in $30 million of its tokens being stolen.

On top of that, Tether and digital asset exchange Bitfinex were subpoenaed in early 2018 with little result, while both were accused of committing market manipulation together.

With no credible audit done, no one truly knows how many “real” U.S. dollars are backing USD-Tether in circulation.

New Regulated StableCoins Will Likely Replace USD-Tether4

Source: https://medium.com/coinmonks/statistical-analysis-of-bitcoin-price-manipulation-by-tether-issuance-in-late-2017-b3342b8915a0

New Regulated StableCoins Will Likely Replace USD-Tether4

https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc

Regulated Stablecoins Replacing Tether!

Audited stablecoins and exchanges are starting to emerge in the markets, providing traders with safer digital pegs to fiat currency and legitimate platforms to work with.

The possibility of Bitfinex and Tether having financial problems in the future could trigger a sharp increase in price volatility amongst cryptocurrencies, however, in contrast to that theory, as new stablecoins continue to have a greater presence in the market, Tether’s impact could greatly diminish.

Interestingly, rival stablecoins are benefiting from the situation: TrueUSD (Circle, Poloniex) and Gemini Dollar (Gemini Exchange) have rallied in recent days and currently trade for over $1.05 at the time of writing. Could this be the shift from Tether to more transparent and audited stablecoins?

This is not investment advice; please always do thorough research and only invest what you are willing to lose.

 

New Regulated StableCoins Will Likely Replace USD-Tether4

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