Tether's USDT Stablecoin Drops 3% Below $1 Peg

USDT is trading at 97 cents on several bourses, and briefly fell as low as 93 cents on the Kraken exchange.

AccessTimeIconNov 10, 2022 at 11:08 a.m. UTC
Updated Nov 10, 2022 at 4:51 p.m. UTC

Stablecoin tether (USDT) changed hands at nearly 97 cents early Thursday, down 3% from its intended $1 peg as traders considered contagion risks from crypto exchange FTX and its related trading arm, Alameda Research.

  • USDT usually trades between a hair under $1 and $1.01.
  • Data from the Kraken, Binance, Coinbase and OKX exchanges show the stablecoin trading in the 97 cents-98 cents range at the four venues. It fell to as low as 93 cents for a few seconds on Kraken.
  • USDT last reached such price levels during May's implosion of Terra and its related UST stablecoin.
  • Tether Global Chief Technology Officer Paolo Ardoino pointed out in a Thursday tweet that over 700 million USDT were redeemed for U.S. dollars in the past 24 hours. "No issues. We keep going," he said.
  • "During periods of market volatility, the trading price for USDT that is quoted on exchanges may fluctuate. This happens because there is more demand for liquidity than exists on that exchange's order books and has nothing to do with tether's ability to hold its peg nor the value or makeup of its reserves," the Tether company said in a statement posted to its website on Wednesday.
  • USDT transactional activity jumped to a four-month-high, data from Glassnode shows. The metric calculates the average value of all USDT transfers over a given time period, seven days in this case.
  • A representative for Tether told CoinDesk in an email that issuer Tether Global is unexposed to both Alameda and FTX.
  • "We would like to confirm that at this time, Tether has absolutely no credit towards FTX or Alameda Research," the external representative said. "Tether tokens are 100% backed by our reserves, and the assets that are backing the reserves exceed the liabilities."
  • USDT prices may deviate from the intended $1 peg, but today's potential depegging comes amid possible contagion risks from the liquidity issues at embattled crypto exchange FTX.
  • FTX came under scrutiny following a CoinDesk report last week that found the balance sheet of Alameda Research, a crypto trading unit owned by Sam Bankman-Fried, who also owns FTX, was full of FTX’s native FTT tokens. This meant that Alameda rested on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.

UPDATE (Nov. 11, 12:22 UTC): Adds Tether CTO comment in fourth bullet, company statement in fifth, USDT transactional volumes.

UPDATE (Nov. 11, 11:32 UTC): Adds details.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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