USDT And Its Declined Dominance Over The Past Year

by | Jul 25, 2022 | Market, Market News, News | 0 comments

During this downfall of the crypto market, top coins such as Bitcoin, Ethereum, etc. are struggling to retain their value. In these circumstances, over the last couple of months, stablecoins also encountered their value loss. Over the past year, the giant stable coin, Tether’s USD has faced its historic downtrend. Though, this biggest stable coin succeeded to sit back at its appropriate price.

What Is a Stable Coin?

A stablecoin is a separate part of the crypto market. Other non-stable coins like Bitcoin, Ethereum, Dogecoin, Solana, etc are so volatile. But stablecoins are naturally stagnant in their price or value. Every stable coin is validated by equalizing it with a physical currency like the US dollar, Pound, etc., and also valuable commodities like gold. It means 1 Tether equals $1. For the volatility of other cryptocurrencies, stablecoins such as Tether USD (USDT), Binance USD (BUSD), Terra USD, etc. are validated for exchanging purposes.

As the stable coin’s value is stable, there is no risk of losing the user’s assets. But in this historic fall of the crypto market, even stable coins got their value declined. This reducing value of a stablecoin or pegged coin has lost its market cap over the past year.

Why Did Tether (USDT) Lose Its Value?

The whole clutter started after the declining value of Terra USD. One of the biggest stablecoins, Terra USD, collapsed with its rate. Awarding this massive change in Terra, investors didn’t want to take more risks anymore. Investors started to redeem their USDT earlier. The bulk redemption of the Tether stablecoin led this coin’s value to less than $1.

Declining Rate Of Tether and Other Stable Coins :

Last year in October, Tether USD fell to a lower rate. Over the year, Tether declined to $0.97. Which is lower than the stable price of $1. Letter it was able to get into $1 again.

According to recent data, Tether USD lost 6.5% of its market cap which is around $10 billion. Its increasingly declining graph scared the crypto investors and forced them to redeem their USDT.

To get an overview of the diminishing nature of the Tether value, it is crucial to have a look at the other stable coin’s elasticity.

In the last period of 2021, the crypto market started to fall. In October 2021, USDT fell to a lower rate. Letter it regained its higher market cap at $83 billion.

Next year, from February 2022, stablecoins were shown their volatility in a never seen manner. From January to February 2022, Binance USD (BUSD) declined very fast. That time Tether was doing well. The value of USDT was higher than BUSD. In mid-March of 2022, USDT decreased its value.  Whereas USDC and BUSD were increasingly rising in value.

From March to May, USDC and BUSD grew respectively up to 26.17% and 28.41%. At that time, USDT and USDP declined to the negative point of the data graph. This year, from March to May, USDT and USDP decreased respectively -by 6.51% and -8.69% of their value.

In June 2022, USDT sat back at $68 billion in the global market cap. Though in the middle of the month, this stablecoin again lowered its value.

Same time, Binance USD bounced back a little bit. Later, the three major stablecoins, Tether, TerraUSD, and BUSD managed to retain their validity.

Present Condition Of The Stable Coins :

Over the last year, these USD pegged coins performed a historic activity in the crypto market. The short-term liquidity increased the redemption of the investor’s stablecoins. Last month, around $7 billion was redeemed from its total supply. Though, currently to the volatility and downfall of the non-stable cryptocurrencies, stablecoins have started to regain their value.