Is Tether (USDT) Following Terras UST In Losing Its Dollar Peg?

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– Tether (USDT), the worlds largest stablecoin, is under extreme liquidation pressure amid the ongoing crypto crash.

– The token is down 4.8% to 0.9508- its lowest level since the 2017 crypto crash.

– This drop is highly uncharacteristic, given that the token is required to maintain a 1:1 peg against the U.S. dollar.

– Investors are wary of any depegging by a stablecoin, after TerraUSD (UST) drastically lost its dollar peg this week.

– The crypto market is experiencing an extreme consolidation since last week, as total market capitalization plunged about $900 billion.

– USDT is the largest stablecoin, and the third-largest cryptocurrency, at a market capital of $81.8 billion.

– Investors appear to be pulling out of the crypto market amid the ongoing crash. Given USDTs widespread use in facilitating crypto trades, it is likely being sold by traders for dollars, in order to reduce their crypto exposure.

– Tethers reserves are shrouded in uncertainty. Bitfinex, the crypto exchange that operates USDT, claims to back USDTs value with a massive reserve pool. But the organization has been criticized over not having enough transparency over its reserves.

– With USTs crash, investor faith in stablecoins may be questioned. This could also be driving selling in Tether, given the uncertainty over its reserves.

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