The collapse of TerraUSD devastated many investors this month; however, one crypto leader sees the fallout as something that the industry needed desperately.
Tether(USDT) ‘s CTO says that it’s significant for the crypto industry, said Tether (USDT), the most traded digital asset, in a statement, during the World Economic Forum and CoinMarketCap’s “The Capital” conference.
On May 7th, the global market capitalization for all crypto assets fell by over 25% when Terra USD started losing its de-peg from its $1 mark. In addition, it has also put the stablecoins backed by actual assets under test as investors quickly moved to liquidate their holdings. Tether holders too cashed out $10 billion in 11 days. Meanwhile, the price of stablecoin dropped below its $1 peg to a low of 95 cents.
Ardoino informed that during 48 hours, around $7 billion was withdrawn and processed, while the average time for redemption was about an hour, Ardoino said, highlighting that Tether’s USDT is pegged by $73 billion in assets it holds in custody.
The CTO then claims that it makes us one of the only stablecoins that have achieved something that many can’t and that many doubted that they could do.
Meanwhile, Dustin Teander, a Messari analyst, explains that the falling of stablecoins during periods of volatility below their price peg doesn’t determine its strength but its capability to redeem withdrawals from depositors.
He also said that he was also not concerned when Tether dropped below its peg.
Tether is deeply rooted in the crypto sector, meaning that the industry’s biggest players don’t want to see it failing, says the head of crypto trading with GSR, John Kramer.
Kramer adds that most major players in the crypto sector say that the crypto industry is incentivized to see confidence in USDT stay. Exchanges and trading firms that effectively are able to redeem USDT [withdrawals] contain many tether risks.
The total circulating supply of the crypto sector increased from $87 billion to $181 billion between May 2021 and May 2022 before falling to $155 billion after Terra’s crash, as per the data from Block Research.
The growth generated from the stablecoin use is meeting the requirements in leveraged crypto trading; the ramification for how long stablecoins can threaten the crypto industry but the financial sector at large continues to be the major concern for financial regulators, as mentioned in a May 9 Federal Reserve’s financial stability report.