One of the more stable coins in recent memory, Stablecoins, has been seeing major volatility from investors withdrawing their money due to high-risk taking.
The stablecoins market cap plunged to $156.8 billion on Thursday, down from about $181 billion in early May, according to CoinGecko.
Tether, the world’s largest stablecoin by market cap, briefly dipped below $1 on Wednesday before recovering.
In a note written by a crypto digital asset manager, IDEG, says, “Stablecoin market cap goes hand in hand with sentiment and liquidity in crypto markets, and it’s slightly worrying the USDT appears to see another round of liquidations.”
Digital asset markets are experiencing a fitting hurricane, hovering after Celsius, a crypto lender, halted withdrawals and transfers between accounts in the wake of the terraUSD stablecoin demise last month, also attributing to the worldwide more arduous monetary conditions putting riskier assets like cryptocurrencies to less attractive levels.
Stablecoins are a type of cryptocurrency that maintain their value, like the US dollar. So one way to keep your funds safe and sound in these volatile times is with stablecoins. But now, that information seems entirely inaccurate.
The Tether market has been volatile in recent weeks as worries about their reserves and exposure to Celsius contribute to a loss of over $5 million for the last 30 days.
“There is some recognition they [Tether] are going to have some bad loans because of Celsius,” stated crypto firm Solrise Group’s head of financial strategy, Joseph Edwards.
But “Tether’s market cap is still above $70 billion, and these things are like a drop in an ocean,” he further said.
According to Tether, any Celsius loans were overcollateralized, and concerns about the composition of its commercial paper reserves were ignited by “false rumors.”