Here’s how the Stablecoin meltcoin wiped off $7 billion within a week

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Tether has been seeing massive liquidation since it momentarily lost its dollar peg last week. The crypto meltdown triggered by the de-pegging of Terra’s UST, another stablecoin, appears to have had a substantial impact on market mood.

Tether worth up to $7 billion was liquidated in one week, according to CoinGecko data. The world’s largest stablecoin has seen its market capitalization plummet from $83 billion on Tuesday to $75 billion today.

Tether is also the third-largest cryptocurrency at the moment. USDC, a stablecoin with a market cap of $52 billion, is the fourth most valuable cryptocurrency. Despite a considerable market aversion to stablecoins, USDC’s circulating supply increased by $4 billion from $48 billion last week.

Tether’s price fell to 95 cents on Thursday as the cryptocurrency market saw a stablecoin crisis. This sparked a debate among traders over the reliability of stablecoins. The issue was whether there were enough fund reserves to act as collateral to back the stablecoin supply. 

Tether fully backed

“Tether is completely backed,” claimed Paolo Ardoino, Tether’s chief technical officer, in this context. He was reacting to a tweet from an analyst on Tuesday who asked if all $75 billion worth of Tether is completely guaranteed. 

“We have redeemed 7B in 48h, without the blink of an eye. How many institutions can do the same?  We can keep going if the market wants, we have all the liquidity to handle big redemptions and pay all 1-to-1. Yes, Tether is fully backed.”

Furthermore, FTX CEO Sam Bankman-Fried stated that the successful redemption of $7 billion demonstrates that reserves were available to pay back.

The recent disaster with the dramatic decrease of Terra’s UST has raised concerns about stablecoin stability. It had also raised concerns about different stablecoins’ cash reserves. 

Tether’s value is said to be supported by almost 84 percent of cash and cash equivalents by Bitfinex, the cryptocurrency exchange that operates Tether. Tether is presently conducting an audit, as previously stated, according to Ardoino in the tweet thread.