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Home » Stablecoins lose parity; the tether is a problem for bitcoin
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Stablecoins lose parity; the tether is a problem for bitcoin

adminBy adminApril 1, 2023Updated:April 12, 2023No Comments2 Mins Read
Tether
Tether

Tether , Stablecoins, Bitcoin

Tether: The stability of so-called stablecoins, which are cryptocurrencies pegged to the value of fiat currencies, is being tested and causing concern among critics. TerraUSD, a stablecoin with a $14 billion market cap, lost its peg and plummeted, causing the cryptocurrency Luna, developed by the same team, to plunge by 98%.

Now, Tether, the largest stablecoin with a market cap of $78 billion, is also under attack, as it is consistently being quoted at a discount to its nominal value of $1. This breakdown in the equivalence between the dollar and Tether means that its real value cannot be determined, leading to worries about financial stability.

Tethr is often used in buying and selling cryptocurrencies like Bitcoin, with most transactions carried out using the Tether/BTC pair, not BTC/USD. Concerns have been raised about whether TethAr has enough dollar reserves to back its peg, with only 3% of its reserves in cash and the majority in commercial paper, making it one of the largest holders of commercial paper in the world.

Critics have called for greater regulation of stablecoins to ensure stability for what is being marketed as a stablecoin to the public. Despite its questionable character, Tethr has been a crucial part of the bull market in cryptocurrencies, with an estimated 70% of all Bitcoin purchases made in Tether.

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