It’s been a week Tether would rather forget with the so-called stablecoin’s price dropping to the lowest it’s been in 18 months.
Fellow stablecoin, Havven, says Tether’s slide comes down to a loss of faith in the coin.
“What’s happened with Tether is people’s confidence in their ability to redeem tethers (USDT) for dollars has fallen,” said Havven CEO Kain Warwick.
Stablecoin is the term used to describe cryptocurrencies that are meant to hold a stable value.
The price of tether is pegged to the US dollar so theoretically one tether token should always be worth a dollar. But it seemed to lose its way this week, at one point trading as low as 86 cents.
“That’s been caused by a number of issues, one of which is Bitfinex having issues with their banking relationships,” Warwick said.
Crypto exchange Binance temporarily suspended withdrawals of the token in the midst of what it called a period of heightened activity.
Investors are shying away and exchanges have moved quickly to list alternative stablecoin options for their clients.
Huobi and OKEx both said they would be listing US dollar pegged cryptocurrencies including Ethereum-based True USD and Circle’s USD Coin, a Goldman Sachs-backed startup.
Tether’s loss was bitcoin and ethereum’s gain, the pair saw a jump in value following the token’s dip.
“People have decided they’re concerned about the risk of tether and have started selling tether into other assets like bitcoin and ether,” said Warwick.
Despite the controversy, the stablecoin market is reportedly seeing strong growth. With a number of new tokens starting to hit the market. And despite the tether FUD, it’s still ranked eighth in the top 100 by market capitalisation.
“Stablecoins have risen to prominence because people are looking for a way to hedge against the volatility of other assets like bitcoin and ethereum and other cryptoassets,” Warwick said.
“I think people need to be wary and do their research when it comes to stablecoins. It’s a good idea to look at all the risk factors that you’re buying into.”