While the crypto market is struck between Terra, and the UST crash, Tether, the third-largest cryptocurrency and one of the most liable stablecoin globally, has raised fear among the investors due to its price drop by 5%.
The global cryptocurrency market is under extreme consolidation for a week now, with total market capitalization dropping to $1.20 trillion after a downfall of 15.75% in the past 24hrs.
At the moment, Tether (USDT) has plunged by 1.57% over the last 24hrs trading at $0.9843, the lowest level since the 2017 crypto crash.
This price action is highly unusual as the Tether (USDT) is required to maintain its peg of 1:1 against the US dollar. After TerraUDS (UST) crashed losing its dollar peg, the investors have become too cautious about de-pegging of tokens.
Reason For USDT Depegging?
USDT is one of the stablecoin that is being sold by traders for dollars so that their exposure to the crypto market is reduced. In the present crypto market, investors are withdrawing their positions from the crypto market.
It’s just not USDT, traders have also leaned towards Binance USD (BUSD) and USD Coin (USDC) suggesting a backup for USDT. Now, in the past 24hrs BUSD and USDC have surged by 1.10% and 0.63% respectively.
As the investors began to shift their focus from USDT, the founder Paolo Ardoino claimed that the token had observed $300 million redemptions to USD in the last 24hrs and this happened without a single drop in price.
Bitfinex Inability To Back USDT, The Reason For Depegging
The exchange that operated USDT, Bitfinex, has now stated that it is backing the USDT value with a massive reserve pool. According to Bitfinex data, nearly 84% of this pool is formed by cash and cash equivalents.
However, the organization is condemned for not being transparent over its reserves and this pulldown could have happened due to Bitfinex’s uncertainty of not backing the token effectively.
The investors faith in stablecoins has definitely given a second thought due to USDT’s depegging. But many are still optimistic with stablecoins.
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Jed McCaleb Still Holds 250 Million XRP In His Tacostand Wallet
According to XRPscan, Jed McCaleb, the co-founder of Ripple Labs and its first chief technology officer, has started selling huge sums of XRP on the crypto market after suspending sales in September last year.
He has escalated his selling by around 140% in the last three days, and a crypto enthusiast expects he will be done selling altogether within a month. Jed currently owns over 250 million XRP in his “tacostand” wallet.
9 Million XRP Sold Everyday
According to statistics released by the XRPscan portal, Jed McCaleb resumed selling the last of his massive XRP hoard as the year began.
He has dumped over 464.8 million XRP since January, which is equivalent to $186,790,421 at today’s market rate.
The amount of XRP coins sold each week varies, ranging from 18 million to 26 million and 42 million. As Twitter user Rafael Ken Aguilar pointed out, he has boosted his selling volume by around 140 percent in the last three days, selling nearly nine million XRP every day, up from four to six million per day previously.
If the current selling rate holds, McCaleb expects he will be out of XRP in about a month.
Jed Still Holds 250 million XRP
According to XRPscan, Jed’s wallet, “tacostand,” still has 249,200,734 XRP in it. The XRP community developed a website to track McCaleb’s sales rate, which shows a somewhat higher figure: 257,858,264 tokens.
Hence, this is the last of the nine billion XRP granted to McCaleb by Ripple’s top management when he decided to move away from the firm a year after it was formed to start as a competitor to the blockchain Stellar.
Depending on how much XRP McCaleb sells per week, two probable dates for McCaleb to run out of XRP are listed here: July 14 and August 8.
According to CoinMarketCap, the sixth largest cryptocurrency, XRP, is trading at $0.404 as of this writing, down by 70.0% in the last 24 hours.
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Traders Withdraw $10M Tether USDT, Yet The Firm Claims To Be Strong
A few days ago, the global cryptocurrency market had just entered a recovery phase but that didn’t last long as the market is once again overshadowed by the bearish momentum today.
The recent updates state that as rumors of surging regulatory scrutiny for stablecoins continues grows, crypto traders withdrew about $10 billion from Tether USDT in the previous two weeks.
As per the data USDT’s circulating supply has plunged from 11th May’s $84.2 billion to $73.3 billion yesterday, on 23rd May.
On-chain data suggests that traders withdrew $1 billion from Tether on May 20 alone. Terra cryptocurrency UST and LUNA crash fuelled the enormous outflow. USDT, like numerous other stablecoins, lost its peg following the UST meltdown. This attracted a lot of attention towards stablecoin and its stability.
In a recent blog post, Tether claims that the de-pegging of USDT across crypto exchanges does not imply that the peg has been broken; rather, the de-peg demonstrates that the liquidity has gained more demand than that of exchange’s order books.
Tether USDT Claims To Have 1:1 Backing
Previously, Tether had said that USDT has a one-to-one dollar bank account backing, however later clarified that it utilizes various assets as collateral, including commercial paper and even digital tokens. This was disclosed after it reached a settlement with New York authorities.
As part of the settlement, the company must declare its reserves every quarter. According to the most recent attestation report, it has decreased its commercial paper holdings while boosting its holdings of US Treasury notes. The firm also announced that it is currently carrying foreign government debt.
Although the majority of the assets in the review are stable, “corporate bonds, funds, and precious metals” and “other investments (including digital tokens)” account for roughly 11% of the total.
On the whole, as per the reports the firm’s reserves have surpassed the amount that is required to regain the digital tokens that were issued.
Tether’s account, however, reveals it has $162 million more in reserves than its tokens, according to Patrick McKenzie, a fintech analyst. However, due to the negative character of the crypto market, some of its investments, such as those in the Celsius network, are doing poorly.
According to Paolo Ardoino, Tether’s chief technology officer, Tether’s stability has been maintained even through multiple black swan events and many highly volatile market conditions. And adds up saying, even in the darkest days, Tether has never failed to keep up with its recovery request that comes through any of its verified customers.
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278 Million LUNA Gets Burnt With The Released Address, Do Kwon Says It’s Pointless!
Do Kwon, the now-famous Terra CEO and founder, published on Twitter on May 21 a dead wallet address where people may send their LUNA tokens to be burned. The uploaded wallet was filled with nearly 280 million LUNA tokens, making the tweet one of Do Kwon’s most popular.
With 2,719 transactions, the total amount of LUNA transferred to the burning address has reached 289 million, meaning that the average number of tokens sent to burn every transaction is roughly 107,000.
There was yet another round of foolishness in this narrative. On May 23, two days after the burning address was published, Do Kwon indicated that sending LUNA to that address is pointless and will result in token loss.
From the moment the wallet’s address was originally disclosed, 254 million LUNA were sent to the wallet and after the tweet exposed the useless idea, there were 25 million LUNA transferred.
Terra Isn’t A Ponzi Scheme
Recently, there was a statement from Pennsylvania Senator Pat Toomey that Terra may be a fraudulent project. Of course, Toomey is not alone. Terra was a classic pyramid scam, according to prominent hedge fund manager Bill Ackman, who warned that such fraudulent ventures represent a threat to the whole cryptocurrency ecosystem.
After the failing blockchain project was linked to the famed biotech fraud Theranos, FTX CEO Sam Bankman-Fried remarked that Terra wasn’t a Ponzi scheme. He stated that this project was basically driven by “mass excitement.”
Meanwhile, South Korean officials have allegedly tried to seize the assets of Terra’s non-profit organization, Luna Foundation Guard, accusing Terra of theft. Almost all of the LFG’s money were spent on failed attempts to assist the TerraUSD (UST) stablecoin to reclaim its peg.
At the time of reporting, Terra (LUNA) is trading at $0.0001633 and TerraUSD at $0.067
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Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
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