$10 Billion Pulled From Tether in Two Weeks

Tether, the world’s largest stablecoin has seen its circulating supply value plunge from a record $84.2 billion on May 11 to around 73.3 billion as of Monday according to data collected by Coin Gecko – with over 1/3rd of it’s market value removed in just two weeks.
The investors are quickly pulling away due to fear governments choosing to regulate these coins’ values strictly.

The cryptocurrency(Tether), which is meant to be pegged to the US dollar temporarily dipped as low as 95 cents on May 12 after another type of stablecoin -Terra USD- plunged to a valuation less than $0.10. That resulted in a sell-off with holders losing over $40 billion worth of value due to this trend.

With fears of a regulatory crackdown growing by the day, many are wondering how this will impact cryptocurrency prices. Kathleen Breitman, a co-creator of the Tezos blockchain told CNBC that she is hopeful people will not mistake fear for courage and overdo things when it comes to cryptocurrency.

“As much as I relish seeing things that don’t make sense fail, there’s always a tinge of like, ‘Are people going to extrapolate from this that everything that’s a stablecoin is unsound?’ That’s always the big fear.”

Investors were drawn to Anchor, Terra’s flagship lending platform. They hoped for 20% savings on yields from UST-based loans that never materialized because of their reliance on complex engineering software to maintain price stability through destruction and creation of these tokens. This practice is similar to that of  fiat currency held by central bank reserves elsewhere around the world. The promise existed but investors soon grew frustrated when it became clear this wasn’t simply about digital cash anymore.

The founder of Luna Foundation, Do Kwon had also accumulated billions of dollars’ worth of bitcoin and other tokens through his Terra project but nearly all funds were depleted in an effort to save UST. Nevertheless, the panic over this cryptocurrency has drawn attention towards other stablecoins such as Tether.

In recent months, it has been unclear as to whether or not Tether is adequately backed by dollars in their bank account. Last week, the founder of Tether revealed that they have increased their Treasury bill holdings for the first time. The British Virgin Islands-based firm also said it holds some foreign government debt and is pursuing a more thorough audit to ensure there are no discrepancies in reserve funds before commenting further on this new development.

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