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by Animats
1481 days ago
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It collapsed because everyone started withdrawing their money at once, and then the whole house of cards collapsed. That may be happening to Tether now. Take a look at Tether's market cap chart.[1] Click on Overview->Market cap-> 1 month. You can see the cashouts. Between 5:09 AM and 5:14 AM on May 27, 2022, the market cap of USDT suddenly dropped by $750 million dollars. There have been five huge cashouts like that since May 13th. About 12% of Tether has been cashed out in the last 3 weeks. This never happened to Tether before. Until now, market cap was "line goes up". Biggest previous drop in market cap was about 1% in mid-2021. So, how long can Tether pay out 4% of its market cap per week? Looks like we're going to find out. [1] https://coinmarketcap.com/currencies/tether/ |
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While Tether may be technically insolvent there looks like there would need to be another $40 Billion in redemptions to really test the peg based on the latest attestation. (They had $82B MC & now have a $72B MC. Cash Equiv. - Comm. Paper & COD = $50B back in March).
My guess is they may have weathered the storm for now. Probably need a few more weeks to fully confirm, but high price today was .9995. If redemptions fully stop or MC goes back up slightly then peg probably returns.