The Terra UST stablecoin pegged to the dollar has been trading for two days. This also affected LUNA, to which UST was algorithmically linked, and led to a drop in its price. These events also threaten other stablecoins and altcoins. Therefore, projects are trying to preserve their ecosystems by taking precautions. In this process, Tether (USDT) seems unable to maintain stability against the dollar.
Why is USDT falling?
At the time of this writing, USDT is trading at around $0.99, down 0.3% over the past 24 hours. In addition, USDT fell to $0.95 during the day, but then managed to recover. It is believed that USDT, which under normal conditions should be equal to $ 1, fell after panic sales of investors amid declining confidence in stablecoins.
In general, after the UST and LUNA incident, yesterday’s Fed statement on the consumer price index managed to have a profound impact on the crypto market. In fact, the cryptocurrency market, currently led by Bitcoin (BTC) and Ethereum (ETH), is going through difficult times and reaching the bottom. Although the fall of altcoins in this process is considered normal, stablecoins are losing their stability for the first time in history.
Tether technical Director Paolo Ardoino states that measures have been taken and USDT will reach $1 again. After this statement, the stablecoin recovers from the $0.95 mark, where it fell, and rises to $0.99. In addition, Tether officials say that there will be a conversion of Tron TRC20 to Ethereum ERC20 for $1 billion and from Tron TRC20 to Avalanche for $20 million, but this will not change Tether’s overall offer. With these and similar measures, Tether begins to recover.
In addition, Tron CEO Justin Sun stated that after LUNA and UST, they are the target and will take action. These events show that the collapse of LUNA and UST affects both stablecoins and the entire crypto market.