Tether is the original stablecoin and has become the prefered stablecoin for investors when it comes to mitigating risk. However, it looks like Tether is suffering from a lack of investor confidence and rumors has it that Bitfinex is halting fiat deposits. When compared to its biggest competitor, Tether (USDT) is about three cents off the mark. While this doesn’t sound like much, when you transfer thousands of dollars’ worth of Bitcoin into it, you want something that’s performing well.
Usually during times of volatility, USDT remains relatively flat, even a minute price rise is normal. Yet, when Bitcoin fell 5% and Ether fell 11% so too did USDT – a very unusual set of events. This has led many in the crypto world to believe that the USDT is beginning to struggle.
Tether Declining with the Market
Usually when the market sees red, USDT sees green, but this time around it lost about 2.1% compared to the USD while its competitor TrueUSD (TUSD) saw a 4% gain in the same trading session. This highlights the case for USDT to be struggling. Many exchanges are now beginning to list USD/BTC pairs, meaning the stablecoin is quickly becoming useless. When you combine these factors with the ongoing debate about whether USDT is actually backed by the correct amount of USD or not, you can quickly see a storm brewing for USDT.
The Bitfinex Equation
The crypto world has been filled with rumors that Bitfinex – the largest hodler of USDT – is close to becoming insolvent, which hasn’t helped USDT’s prospects either. Bitfinex holds more than 290 million USDT in its hot wallet, and it has seen over 100 million of that transferred out in the past few days. This could further indicate that Bitfinex is in big trouble and seeing as it has a very close relationship with USDT it could spell the end for both of them.
Plenty More USD Stablecoins Around
Don’t let this news panic you, there are lots more USD pegged stablecoins out there. In fact, the Winklevoss twins just launched their own USD stablecoin – the Gemini Dollar. Unlike the USDT, the Gemini Dollar, however, is regulated by the New York Department of Financial Services – making it only one of a handful of regulated stablecoins. These new regulated stablecoins are seen to be the next generation of stablecoins and are likely to knock the classics off their perches.
This combination of events could be the ultimate undoing of the most popular stablecoin around, but it is slowly starting to fight back. Its price is creeping back up, but TUSD is still looking much stronger in terms of trading flat – the perfect conditions for a stablecoin. While TUSD may take over in the short term, this new generation of regulated stablecoins is likely to take the throne as we enter 2019.