LUNA: Data on Curve’s stablecoin pool has triggered concerns over a new LUNA event. According to reports, short selling rates for Tether (USDT), the largest stablecoin, are quite high. Here are the details…
- 1 Curve pool pointing to new LUNA event?
- 2 After the collapse of the Terra ecosystem, users turned to Tether
- 3 Share this:
Curve pool pointing to new LUNA event?
The data on Curve’s 3pool, where users can exchange between USDT, USDC and DAI stablecoins, was quite interesting. Monday’s Bloomberg report showed Tether makes up 65 percent of the supply. According to experts, this is an indication that Tether holders are more willing to sell their holdings. A Tether spokesperson used the following statements about this issue:
USDT is the most widely held and accessible stablecoin in the world. So it’s not surprising that more people own USDT and are ready to trade it for other assets they want to use for other purposes.
While Tether largely attributes its dominance of the 3pool supply to its adoption, it is worth noting that its supply in the pool increased to such a high volume only after Terra USD lost its peg to the US dollar (de-peg). Notably, Tether’s share of the supply was only 29.9 percent as of May 6 before the Terra crisis. Also, its supply in the liquidity pool increased to 82 percent on May 12 as the UST continued to decline.
After the collapse of the Terra ecosystem, users turned to Tether
As the Wall Street Journal reported last week, hedge funds have placed big bets against USDT in the wake of the Terra ecosystem collapse. It’s worth noting that since the UST’s de-pegging, scrutiny of stablecoin reserves has increased. So, Tether’s reserves have been questioned once again. AmkNews.com As we reported, Tether continued to issue third-party attestations of crypto assets. However, critics of the stablecoin called for a full audit instead. Meanwhile, Tether reported that it has made its reserve as liquid as possible, boosting US treasury bills.
Several experts have said that a major USDT de-pegging event could be disastrous for the crypto markets. Tether is not just the largest stablecoin. It is also the 3rd largest cryptocurrency by market capitalization, serving as the most used and off-ramp for other assets. Although Tether seems to be losing popularity in hedge funds, it still retains significant individual demand. As a result, recent reports suggest Argentines are buying stablecoins en masse as inflation concerns rise. The same trend can be seen in a few emerging economies that are witnessing worsening inflation. Tether saw $16 billion wiped from market capitalization in just over a month as it caused a surge in redemptions.
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