The broad fears around stablecoins contributed to the panic selling of USDT, which is long rumored not to have enough reserves to redeem all coins in circulation. Other conventional stablecoins are trading at a premium. Binance USD (BUSD) and Coinbase USD (USDC) briefly reached $1.08 and $1.09, respectively. Tether CTO Paolo Ardoino ensured that Tether continues to process redemptions normally.
Unlike algorithmic stablecoin TerraUSD, Tether is a conventional stablecoin backed by a pool of assets which include cash, secured bonds, corporate loans, precious metals, and digital tokens. Each USDT is supposed to be redeemable for $1 at any given moment. However, Tether's financial disclosures lack key details about the significant share of the reserve assets, which fueled traders’ anxiety and dipped the price.
Over the last few days, TerraUSD (UST) drastically depegged, reaching $0.26 at some point and currently trading at $0.56. Its reserve token LUNA crashed to $0.05, 99% down from its ATH on April 4. The crisis sent shock waves across the crypto market, as Luna Foundation Guard deployed all its Bitcoin reserves to maintain the peg.