“Now, FUD around USDT de-pegging isn't something new and often happens at the worst time possible,” Santiment insight reads, citing the popular crypto acronym that expands to “fear, uncertainty, and doubt.”
Frightened by the LUNA/UST death spiral, investors started selling USDT at a discount, reaching at some point the low of $0.94. At the same moment, profit-makers started buying USDT below its target price and redeeming it for $1. That probably explains why massive redemptions have followed the dip.
At the same time, investors streamed funds released from USDT selling into USDC, a fully collateralized stablecoin deemed more stable than controversial Tether. USDT critics argue that the coin isn’t actually backed by US dollars, representing a ticking time bomb for the crypto market. However, the latest report by Tether reaffirms Tether’s reserves are fully backed by cash, Treasury bills, and commercial papers.
In general, fully collateralized stablecoins like USDC, BUSD, and DAI have been doing well since Terra’s collapse. In contrast, a few algorithmic stablecoins, such as Deus Finance’s DEI and Kava Network’s USDX, have also lost their peg.
