Tether (USDT), the world's best-known stablecoin, broke its peg against the dollar in reverse, falling to an 18-month low and halving trading volumes.
The US dollar-backed token, which had a capitalization of about $2.9 billion at the end of the summer, is now valued at just $2.1 billion, representing a two-month drop of almost 25 percent. This decline is partly due to the price of USDT falling below $1.00.
Even though Tether traded at $0.98 overnight, its market capitalization fell, primarily indicating a decline in the overall supply of coins in the market. According to CoinMarketCap, there are approximately US$2.26 billion in circulation, out of a total supply of US$3 billion.
Such a price drop, experts estimate, could only reduce the market capitalization by around US$50 million. The rest of the decline is due to the withdrawal of hundreds of millions of dollars of Tether during October.
Bitfinex sent payments of $50 million and $200 million to Tether Ltd, removing $250 million worth of tokens from circulation, and these were not the only such transactions that month.
By mid-October, the issuer had withdrawn approximately $300 million worth of stablecoins from circulation through two transactions. completed on October 9 and 14. A total of 560 million coins were minted in October, and none have been put into circulation since September 21.
Another stablecoin broke its peg with the US dollar earlier in the week - except it soared well above the dollar rather than below it.
Gemini (GUSD) token saw a record price rise to $1.19 on Tuesday.
GUSD was released early last month when the exchange, founded by Cameron and Tyler Winklevoss, announced that it had received approval from the Department of Financial Services in New York to list and issue the token pegged to the dollar.
At the time, a press release stated that the token would be “strictly pegged” to the dollar, but the stablecoin market has been throwing up surprises for traders lately.
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