Tether’s market cap has fallen close to its lowest level for the year, down from $2.8 billion to now circa $2.1 billion in the biggest drop it has ever seen.
Its trading volumes are down too, now at $2.5 billion from near $5 billion, with the token seemingly no longer able to hold its dollar peg.
Prior to September 28th, tether was at about one dollar. It then starts falling very slowly at the beginning of October, with the drop accelerating from October the 9th onwards, to then plunge on October 15th.
Since then, it hasn’t really recovered, staying at circa $0.95 for the past few days as the peg appears to have been lost.
That must have led to an exodus away from tether and into other cryptos, starting on October the 9th when its market cap sees the first recent drop.
The market cap then plunges on October 14-15, with another drop following on October 16th and this Wednesday, sending it close to its lowest level for the year.
What exactly is going on is not very clear because although it was thought this was due to banking difficulties, Bitfinex recently announced they had secured another bank account.
Tether, therefore, should get back to its peg, but that has not happened so far. Whether it will, remains to be seen, with other stablecoins now gaining in popularity.
Gemini’s GUSD, for example, has gained trading volumes of $9 million, with its price reaching $1.19 at one point.
TUSD has now reached a market cap of $160 million, but that too hasn’t been very stable with its price reaching $1.10 at one point recently.
Likewise DAI has seen its market cap increase to now above $62 million on trading volumes of $3.3 million with its algorithmic peg fluctuating only little recently from $1.01 to $0.98.
Raising the question of whether tether will ever recover and/or when Binance will replace them with a stablecoin that can actually keep its peg.
Changpeng Zhao, Binance’s CEO, recently said he was waiting for the market to lead by giving another stablecoin more liquidity, but Binance is the market, or at least one of them.
If, however, tether continues to stay at around $0.95, then it is probably just a matter of time until it is replaced not least because that would indicate there is some sort of problem which may even include the possibility that tether isn’t fully dollar backed.
Their website currently says on its frontpage: “our reserve holdings are published daily and subject to frequent professional audits.” A statement that at best is very misleading because they have not had one audit since they started rising in market cap around April 2017.
Therefore no one really know if they are fully dollar backed as they have provided no proof to that effect.