The volatility of cryptocurrencies causes other stack coins to lose their value.

Stablecoin’s market capitalization fell to $ 156.8 billion on Thursday, from about $ 181 billion in early May, according to data from CoinGecko.

Tether, the world’s largest stablecoin, fell briefly to $ 0.993 on Wednesday, though it quickly regained parity with the dollar.

“Stablecoin market value goes hand in hand with sentiment and liquidity in cryptocurrency markets, and it is worrying to say the least that USDT appears to be in the process of another round of sales,” the digital asset manager wrote. crypto IDEG in a note.

Digital asset markets are facing a perfect storm after cryptocurrency lender Celsius froze payouts and transfers between accounts following last month’s demise of stablecoin terraUSD, as well as the global tightening of monetary conditions that make more risky assets such as less attractive cryptocurrencies.

Stablecoins are cryptocurrencies linked to the value of traditional assets, such as the dollar, and are the primary means of moving money through digital or cash tokens due to their lower volatility.

They are also the target of funds that arbitrate between exchanges and geographic areas and try to bet on stack coins that are priced marginally below par and regain par.

Concerns about Tether Celsius’ exposure, coupled with persistent concerns about its reserve assets, have caused it to lose more than $ 5 billion in market value over the past 30 days.

“There is some recognition that they (Tether) will have some bad loans because of Celsius,” said Joseph Edwards, chief financial officer of cryptocurrency firm Solrise Group.

But “Tether’s market value is still over $ 70 billion, and these things are like a drop in the ocean,” he added.

Tether, for his part, said any Celsius loan was oversized and that concerns about the composition of its commercial paper reserves were driven by “false rumors”.


A number of algorithmic stack coins – which, like terraUSD, use complex mechanisms to control the token supply and maintain their attachment to the underlying asset – have also been affected.

USDD, the algorithmic stablecoin from the smart contract platform Tron and the ninth largest stablecoin measured by market value, lost its bond to the dollar on Monday and fell at one point to $ 0.96 as short sellers built up extremes against cryptocurrency, according to researcher CryptoCompare.

Tron founder Justin Sun has promised to deposit over $ 2 billion to defend the stacking of stablecoins.

“I do not think they can last even 24 hours. Short squeeze is coming,” he tweeted Monday. Sun did not immediately respond to a request for comment.

DAO of Tron, which manages the reserves for the stablecoin, said on Wednesday that it would withdraw 2.5 billion of its tron ​​tokens from the Binance cryptocurrency exchange to help support the USDD. However, the USDD has not yet regained its bond and is trading at $ 0.976.

Other algorithmic stablecoins have also faced de-pegs over the past few weeks, including stablecoin Frax, which has since risen, and Neutrino USD, which fell as low as $ 0.93 on Wednesday and rose, and is still trading below the dollar to $ 0.966.

Still, these stack coins are much smaller in size than Tether, or even terraUSD at its highest.

“There are still dpegs in algorithmic stack coins, but these keep repeating themselves … if something bad were to happen to them, it would not represent a breach of the ecosystem, as Tether would have done,” Edwards said.

One of the potential winners of the current turmoil is USD Coin, backed by cash reserves and US government bonds, which have seen market value rise steadily from $ 52 billion over $ 54 billion over the year. last month, even as other stablecoins struggled.

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