Finance

Tether Theory Behind The Short-Sell Of USDT

08/01/2022
Bitcoin Ethereum News

Tether

  • The USDT issuer said hedge funds that sorted its stablecoin after Terra’s collapse in May are “incredibly misinformed” or “flat out wrong.”
  • This information is sourced from a blog post shared by Tether on June 28, Wall Street Journal Podcast.

What Tether Said?

In the podcast, Tether said, “The simple fact that hedge funds view Terra’s collapse as a constructive thesis to short USDT represents the asymmetric knowledge gap between cryptocurrency market participants and entities in the traditional finance space.”

In May, TerraUSD Classic (USTC) dramatically fell and lowered the price of the native token of Terra ecosystem, LUNA, to fractions of a cent from over $60. And also noted an almost 21% drop in market cap since May.

Additionally, the chief technology officer of Tether, Paolo Ardoino, ratified that USDT becomes the subject of a “coordinated attack” by hedge funds. He added that hedge funds create pressure “in the billions” to “harm Tether liquidity.” So that the tokens can be bought at a very low price.

Tether also shared in its blog post, “In short, the underlying thesis of this trade is incredibly misinformed and flat-out wrong. It is further supported by a blind belief in what borders on outright conspiracy theories about Tether.”

On the other hand, Tether certifies that they have tried out its financial banking and ability to privilege liberation. And iterating that it does not own any Chinese commercial paper and has not cut its total holdings of commercial paper by 88%, from $30 billion to 3.7 billion over the last year.

ALSO READ – Terra Collapse Couldn’t Affect Metaverse And GameFi 

The commercial paper holding would be low as $300 million by the end of August and hold onto zero commercial paper by early November.

During the starting week of the UST fiasco, USDT depegged briefly on the open market to a low of around $0.96 because investors dumped tokens. Although Tether remained to honour fiat liberations of $1 per token via that phase.

The last financial disclosure of Tether on March 31 shows around 84.64% of Tether is in the form of liquidity, including commercial papers.

Source: https://www.thecoinrepublic.com/2022/08/01/tether-theory-behind-the-short-sell-of-usdt/