Why is the value of USDT less than one dollar?

justdimin

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Quote from: Ahli38 on June 10, 2022, 11:55:18 PM

After what happened to UST. Many crypto users are now choosing BUSD and USDC. because these two Stablecoins conduct regular audits.
Meanwhile, USDT in terms of audit, regulation and underlying storage is less transparent. so many sell it and switch to USDC and BUSD. maybe this is also one of the reasons. Moreover, there have been problems in the past that have tarnished the reputation of USDT itself. although USDT at that time was able to solve the problem well. But people are still afraid and feel that USDT is still a high risk.

I would say that people do not even pick those anymore. USDT lost a ton of blood, there were 10+ billion dollars worth of withdraws from there, and they had to cash out so much to pay for that much leaving them all at once but they did it, each time is a bit of a problem for them because they invest into liquid assets to make a profit as well.

Secondly, USDC didn't grow all that much and neither did BUSD but that could be mainly because of the market going down as well, people might be leaving all together instead of just turning their crypto to stablecoins. This UST deal was just something major and hurt all of the market and not just even stablecoins.

blockman

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Quote from: Oilacris on June 11, 2022, 05:44:10 PM

Quote from: blockman on June 11, 2022, 05:29:56 PM

I've been seeing that with USDT even before the issue has popped on it. It's really fluctuating from $0.99 to $1.0xx but I understand that it should really be valued and won't move that much and equal to a dollar.
I guess everyone's going to panic if we start to see it go down at $0.98 and then the whole market will collapse as we know that there's a huge contribution that's coming from the Tether.

Highest dropped?
Tether Loses Dollar Peg as Crypto Anxiety Hits No. 1 Stablecoin
https://www.bloomberg.com/news/articles/2022-05-12/tether-moves-to-reassure-market-after-biggest-stablecoin-slips

Falling to 94.55
As long it wont be falling .90 then i dont see some issues
yet volatility for a stablecoin isnt something shocking imho.

I think I've missed that news or I've just forgotten it. Well, people are too worried about these dollar pegged stable coins and for sure even just a single move of it, they'll all panic on it. Those who have been saving their wealth into a stable coin, they're pretty worried whenever there's a huge fluctuation to the market and most of its affection goes to bitcoin and as we observe, whenever bitcoin moves, stable coins like Tether also decreases a bit of it. Everyone who's worried about the fluctuations happening in stable coins should think of a better long term strategy and plan and the best of it is to just trust bitcoin in the long term.

fuer44

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What is clear is that USDT is a crypto, not a conventional currency. So, it is not surprising that the USDT price will not be the same as the dollar exchange rate even though at the beginning of its launch in the market, the price is always close to the dollar. Apart from that, we also know that the crypto market is very volatile even though the USDT is called a "stablecoin", but that does not rule out the possibility that the price will also fall following the current trend.

Oilacris

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Quote from: blockman on June 11, 2022, 05:29:56 PM

I've been seeing that with USDT even before the issue has popped on it. It's really fluctuating from $0.99 to $1.0xx but I understand that it should really be valued and won't move that much and equal to a dollar.
I guess everyone's going to panic if we start to see it go down at $0.98 and then the whole market will collapse as we know that there's a huge contribution that's coming from the Tether.

Highest dropped?
Tether Loses Dollar Peg as Crypto Anxiety Hits No. 1 Stablecoin
https://www.bloomberg.com/news/articles/2022-05-12/tether-moves-to-reassure-market-after-biggest-stablecoin-slips

Falling to 94.55
As long it wont be falling .90 then i dont see some issues
yet volatility for a stablecoin isnt something shocking imho.

blockman

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I've been seeing that with USDT even before the issue has popped on it. It's really fluctuating from $0.99 to $1.0xx but I understand that it should really be valued and won't move that much and equal to a dollar.
I guess everyone's going to panic if we start to see it go down at $0.98 and then the whole market will collapse as we know that there's a huge contribution that's coming from the Tether.

vv181

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I get what you mean. I also wondered, I'm afraid we can't know for sure but only speculate, Tether has been known(proved) to be shady, as such, to find clarity wouldn't be easy. Ranging from UST shitshow, China commercial paper[1], Financial Times FUD[2], ~$10B redemptions, other stable coins competition, the overall market uncertainty, and especially as matter of fact, their current reserves condition(lack of liquidity) may indicate that the whole market doubting USDT stability.

[1] https://www.coindesk.com/business/2021/11/12/tether-bitcoin-and-chinese-commercial-paper-at-scale/
[2] https://tether.to/en/ft-fixation-continues-same-rehashing-of-selective-old-news-on-new-medium-of-communication

illetyus

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USDT is not entirely equal to 1 USD. There may be very small fluctuations in price according to demand.

I trust USDT. The majority of USDT is already in OTC markets outside of crypto markets. It is very common, especially in countries like China.

nakamura12

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I think it's because USDT is not us dollar but a copy of usd. After all, usdt is made based on usd so that's my opinion why usdt price is different from usd but the price movement works the same way as usd correct me if I am wrong. If usdt is really the digital part of usd then I would say that the price will be the same as usd.

Xal0lex

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Quote from: hugeblack on June 09, 2022, 10:19:14 AM

What has changed so that the price of USDT stablecoin is less than one dollar and continues to be for about a month?

The reason, as in 2018, is that investors and traders are switching to the USDC on a large scale. This is evidenced by this data:

Also, additional reasons could be the capitalization outflow from USDT and the massive sales of tokens on exchanges with the subsequent transition to other assets. Also you should not forget that now there is a big demand for USDT withdrawal, and USDT is not 100% secured with fiat money, this may create difficulties in funds withdrawal.

naira

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Quote from: hugeblack on June 10, 2022, 04:50:55 PM

why USDT not back to 1?

Well I will answer as simple as possible, but this is up to you. From my search for a question: why is USDT not returning to the price of $1? This statement or at the same time an answer published 4 years ago by the Former Co-founder of Tether himself. Whether that's true or not, I don't really know.

Here's how simple it is:

Quote

The short answer for why Tether does not trade for exactly USD $1 but instead fluctuates in price - close to by not exactly USD $1 - is because Tether is not literally USD $1. Tether is a derivative representing USD $1. Each Tether is backed by USD $1. But to redeem a Tether for USD $1 would require effort or as an economist would say ‘transaction costs’. For this reason one would expect Tether to trade below its redeemable value of USD $1. But why then does Tether sometimes trade above USD $1? This occurs because it is much easier for someone holding crypto currency - who is urgently seeking the perceived safe harbor of less volatile fiat money - to acquire a fiat-like crypto (ie Tether) than it is to acquire actual fiat. This is why when you see Tether trading above USD $1 it is nearly always when blood is in the water in crypto land and people holding cryptos are desperate to move into a perceived safer asset.

https://www.quora.com/Why-does-Tethers-price-fluctuate-around-one-dollar-by-half-a-cent-or-less-and-not-stay-exactly-put-at-one-dollar

Is that enough to get rid of your doubts?

Jackl87

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Quote from: hugeblack on June 09, 2022, 10:19:14 AM

If we look at the chart of USDT/USD, we will find that the price has always been above one dollar (1.0002~1.0007) or equal to one dollar, but since what happened a month ago and we are still slightly less than one dollar, does anyone know the reason?
What has changed so that the price of USDT stablecoin is less than one dollar and continues to be for about a month?

Well the price of USDT is at 0,9991 at the moment so even if it is not exactly at 1 Dollar at the moment it is still very much usable in my opinion. That being said, it definitely is not creating a lot of trust and confidences towards USDT when a bear market like the one that we are experiencing in the last few weeks is enough to make the price go below 1 USD for a few weeks already now. Like others in this thread already mentioned i also think that the problem is that the company behind USDT has not enough money anymore to directly back every USDT with a real USD. They just have reserves and those reserves are not so easy to reach and so fast to cash out in order to keep the price at 1$.

hugeblack

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Quote from: zasad@ on June 11, 2022, 04:31:35 AM

1-2% is the usual commission, which depends on the supply and demand in the market

My question was not about volatility, but why did the price not touch the level of one dollar since that time?
I was expecting there to be some fluctuations up or down but from over a month the price is always less than one dollar.

For example:

- 30d Low / 30d High -------------------> $0.9969/$0.9996
- 90d Low / 90d High -------------------> $0.9485/$1.00
- 52 Week Low / 52 Week High -------------------> $0.9485 /$1.03

This is what I mean.

zasad@

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All-Time High $1.32 -24.4%
Jul 24, 2018 (almost 4 years)
All-Time Low $0.572521 74.8%
Mar 02, 2015 (over 7 years)
source data
https://www.coingecko.com/en/coins/tether
1-2% is the usual commission, which depends on the supply and demand in the market

jrrsparkles

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Quote from: hugeblack on June 09, 2022, 10:19:14 AM

If we look at the chart of USDT/USD, we will find that the price has always been above one dollar (1.0002~1.0007) or equal to one dollar, but since what happened a month ago and we are still slightly less than one dollar, does anyone know the reason?

Source CMC

What has changed so that the price of USDT stablecoin is less than one dollar and continues to be for about a month?

I don't know exactly how much UST was in circulation before it crashes but atleast half of the value moved to other coin especially stable when its crashing so people are ready to pay little higher than actual value but this value is just the average of total not the actual one if I am not wrong.

Ahli38

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After what happened to UST. Many crypto users are now choosing BUSD and USDC. because these two Stablecoins conduct regular audits.
Meanwhile, USDT in terms of audit, regulation and underlying storage is less transparent. so many sell it and switch to USDC and BUSD. maybe this is also one of the reasons. Moreover, there have been problems in the past that have tarnished the reputation of USDT itself. although USDT at that time was able to solve the problem well. But people are still afraid and feel that USDT is still a high risk.

Yogee

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Quote from: hugeblack on June 10, 2022, 04:50:55 PM

.... but we rarely We continue with levels below $1 for about a month.

It's probably still related to the panic caused by the fall of Terra's UST. Investors have withdrawn more USDT to the tune of $7 Billion in the past and huge redemptions continues to this day. It's hard for any company to handle such amount so this is where Tether's liquidity issues comes in.

hugeblack

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I don't know, maybe I didn't get what I'm about to say correctly, but I didn't ask why the stablecoin was stable or why it wasn't worth one dollar, this currency was not worth one dollar for long periods, but it was always a little more than a cent or equal to one, but we rarely We continue with levels below $1 for about a month.

USDC is strongly equal to 1 USD, and some stablecoins are better than USDT, why USDT not back to 1?

$anounimus$

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In the course of cryptocurrency trading, one may feel stable and uniform in its rise. Since the creation of USDT, its value has often been on an upward trend. This shows that USDT is more closely related to USD, and is currently the largest stable coin on the market it is also very possible that investors have borrowed funds to buy virtual coins because money has increased rapidly and will surely fall sharply. Nonetheless, USDT is still one of the best stable coins on the market today, so it's well worth a look.

Apocollapse

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There's some consideration that can make USDT is steady less than one dollar
1. The team behind this project are lazy or under perform, they didn't burn the token and keep continue to mint new token.
2. Many people are in mood to buy Bitcoin with USDT since BTC is 2x cheaper than previous ATH [1]
3. Tether isn't fully backed with real USD, that's make the other collateral who have bad perform, will deduct of USDT price.

[1] https://www.tradingview.com/symbols/USDTBTC/

hd49728

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Because there was fud and attacks the USDT is not actually pegged by US dollar. In theory, in design, 1 USDT is backed by 1 USD.

The attack on USDT comes after the massive meltdown of so-called algorithm stable coin UST. Then this attack on USDT makes people panic and sold their USDT to get USD. It is kind of bank run but USDT is strong and it holds its peg so far.

Historically, it is not the first time USDT falls like that. In the past, it even fell more. You can zoom out and see some more dramatic falls of USDT.

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Quote from: X-ray on June 09, 2022, 06:41:16 PM

Basically even when people called that USDT was stable token but they don't remember if that's still a token which was peg with the liquidity and trust from the market. The chart was happening during the panic sell that happened with crypto market. The liquidity from the market was always become the most important thing to keep the peg of token even when this token claimed to be fully backed by dollar or fiat money.
Sometimes when so many people that owned USDT were dumping their USDT at the same time. This will be drained the liquidity and that makes the price will be below 1 dollar.

Agree with you, see the movement of people who panic with what they have to incur huge losses. There are some people who can't avoid the panic that builds up inside of them. So you should continue to see the latest charts about the coins you currently have. But I've also been at a loss for the past few months.

X-ray

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Basically even when people called that USDT was stable token but they don't remember if that's still a token which was peg with the liquidity and trust from the market. The chart was happening during the panic sell that happened with crypto market. The liquidity from the market was always become the most important thing to keep the peg of token even when this token claimed to be fully backed by dollar or fiat money.
Sometimes when so many people that owned USDT were dumping their USDT at the same time. This will be drained the liquidity and that makes the price will be below 1 dollar.

cryptomaniac_xxx

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The only reason is that USDT is back up by nothing, or just running on fractional reserves that's why they can't cope with with the 1:1 pegged.

And that's why as explained by @Sterbens, other stable coins keep it that way because they are actually back up by reserve assets, like bonds and then they have a good company behind who is willing to help in case something went wrong. But in the Luna case it was not that's why it de pegged and then didn't recover on time.

Moeda

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USDT is a replica of USD in crypto. USDT is crypto, so price changes are very likely. Supposedly on exchanges, USDT exchange pairs are not traded with USD. If this is done, then USDT is not the same as USD, because it is not possible to exchange for the same value.
Not only USDT, many other cryptos with stable value based on Fiat are not equivalent to the Fiat value of a country.

Sterbens

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In general, I think when I see a falling Luna, USDT should drop and come back only around 0.9, which is different from USDC. Here we can see that the USDT claim is not completely 1:1 with the Dollar. Ifinex Inc company which owns Bitfinex Exchange as a company from Hong Kong Cash Only 3 - 5% in US Dollar backup and the rest is United States government bonds and private government bonds.

In fact, we see that the strength of the 1:1 value is actually demonstrated by USDC with Circle holdings joining Coinbase, namely 100% Cash and US government short-term bonds. What's interesting is whenever it can be redeemed. In my opinion, USDC's resistance is much better than USDT which is currently showing weakness. Plus the biggest companies like BlackRock and Fidelity also invest in USDC.

hugeblack

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If we look at the chart of USDT/USD, we will find that the price has always been above one dollar (1.0002~1.0007) or equal to one dollar, but since what happened a month ago and we are still slightly less than one dollar, does anyone know the reason?

Source CMC

What has changed so that the price of USDT stablecoin is less than one dollar and continues to be for about a month?

Topic: Why is the value of USDT less than one dollar? (Read 265 times)