The value of Tether (USDT) stablecoin against the U.S. dollar is seeing significant downward pressure on exchanges and has fallen below its $1 peg price.
May 11 saw a 0.8% swing to the downside before closing the day at $0.9958. However, there was a massive 3% downward swing on May 12, with the $0.9663 level providing support as of press time.
Source: USDT/USD on TradingView.com
Stablecoins under the spotlight
With crypto markets still reeling from the unfolding Terra UST disaster, another stablecoin de-pegging could spell further trouble.
Terra’s UST is an algorithmic stablecoin, which, instead of being backed by assets, relies on an algorithm that incentivizes traders to maintain the peg.
Slight deviations from $1 are expected with stablecoins. However, UST sunk as low as $0.25 on Wednesday, triggering panic in the markets.
This episode has thrust stablecoins firmly into the spotlight. Lawmakers express concern over the lack of regulation that enables such a situation. This week, U
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