Types cryptocurrency exactly like Bitcoin and ETH can sometimes increase or decrease by double digit percentage in a day. Therefore, most people think crypto associated with volatility. But some types try to achieve the exact opposite. That is stablecoins, which is always fixed to fiat currencies like the US dollar in a theoretical 1:1 ratio.
But what if that rate cannot be kept?
The battle between USDT and USDC
The event of losing the latch and falling of Terra eventually created shock waves throughout the cryptocurrency market. After that incident, the stablecoins other big like USDT, USDC and DAI are also affected. But it looks like the biggest stablecoin – USDT still can't regain its past glory despite having grown considerably.
New development helped USDT reached an astounding $72.5 billion market cap. But not long after that, the largest stablecoin corrected 0.1% and slid to $0.99.
Stablecoins are next to each other USDT is USDC, has achieved $5 billion in market value. Meanwhile, BUSD is the third largest stablecoin, accumulating an additional $1.4 billion in value. Both maintain the $1 close.
The source: CoinMetrics
Looking at the chart, USDT actually dropped significantly. Things got worse over the past two weeks as investors withdrew more than $10 billion from USDT, reducing the market capitalization to $75 billion. From May 9 to press time, USDT lost $11 billion in market capitalization as holders started swapping stablecoins for USD, similar to UST.
USDT is still the top stablecoin
Of course, USDT remains the leading stablecoin on the market. But more doubts began to spread over time. Tether announced to maintain the pegged price to the US dollar with equivalent reserves including commercial paper, bank deposits, precious metals and government bonds.
However, the company does not disclose details of its reserve investments, which may contain some illiquid or leveraged assets.
Due to that ambiguity, founder and CEO Changpeng Zhao of Binance said he considers USDT a high-risk stablecoin.
"It's a black box for most people, myself included," he said.