Tether, the oldest and largest stablecoin tied to the U.S dollar, has fallen below par value for the longest stretch since bitcoin hit 12-month lows in March. Tether maintained or exceeded par value consistently during bitcoin’s subsequent two-month rally. 

The cryptocurrency, also known as USDT, dipped below $1 on Friday and has stayed below that mark as of press time Monday, according to data from exchanges Kraken and OkCoin, which support two of the largest USDT/USD markets by volume. Bittrex and FTX, which also support the trading pair, showed similarly discounted tether prices. 

One possible explanation for the price dip is persistently strong buying pressure for bitcoin, especially on futures markets. Tether is typically used as a stand-in for U.S. dollars on crypto exchanges, a currency for buying other assets rather than an investment. Big shifts in demand can cause tether to temporarily deviate from its peg.

Read more: As Tether Supply Hits Record Highs, It Moves Away From Original Home

For instance, the bellwether stablecoin spiked as high as $1.03 on Kraken in early March when bitcoin fell to 12-month lows amid market-wide bitcoin selling. 

“Bitcoin futures are at premiums, indicating buy pressure,” said Sam Bankman-Fried, CEO of FTX, an exchange that also supports a USDT/USD market. “That can drive up BTC/USDT and so drive down USDT, especially on margin exchanges,” he explained. 

tether-dip
USDT/USD historical price data from Kraken
Source: TradingView

Tether’s dip below $1 coincides with a brief respite of new token issuances. “We’ve seen really strong USDT inflows for months unrelated to BTC price movements, and it’s possible those are tapering off,” said Bankman-Fried. 

Over the past two months, Tether Ltd. issued over 3.5 billion new tokens, an average of roughly 60 million tethers per day, according to Coin Metrics data. Since Thursday, however, tether’s market capitalization, a proxy for supply since it’s ostensibly redeemable for $1, decreased by $7 million. 

Read more: Stablecoin Supply Breaks $10B as Traders Demand Dollars Over Bitcoin

Compared to previous price fluctuations, however, Tether’s latest dip could be a non-event, falling below par at most by only one tenth of a cent at the time of publication. The steepest discount in recent history occurred in late April 2019 when USDT dipped more than 3% below par, which coincided with a suit against Tether and Bitfinex by the New York Attorney General’s (NYAG) office pertaining to an alleged loss of $850 million by the exchange.

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