Why StableCoin like Tether fall below $1?

bittick

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Quote from: justcharlz on December 27, 2018, 02:26:30 AM

Hi guys,

Can anyone explain why tether falls below $1 dollar?
Also, most STC are centralized and dollarized, isn't that going back to reliance on fiat.

Because there were tons of tether being dumped to the market instantly, that will create a panic dump to the market and that makes sense if there was no a lot of order. the tether will fall below $1 dollar.

Ini35

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Quote from: justcharlz on December 27, 2018, 02:26:30 AM

Hi guys,

Can anyone explain why tether falls below $1 dollar?
Also, most STC are centralized and dollarized, isn't that going back to reliance on fiat.

At first, i was amazed when i saw tether at below $1 and i asked myself what could have happened, but after making some findings, i discovered that it plummeted mainly, because of the news that went round, stating that it is a scam. At that time, some people wanted to quickly sell theirs, so they were selling at very low price, so as nit to lose out. There are still quite some god number of stable coins.

Cloud_miner

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I think that the reason why the price of any stablecoins like USDT or USDC can deviate from the price equal to 1 dollar is that in fact the stability of such currencies is also quite relative and at times of peak loads in the market may result in a shortage of supply for such currency which leads to such phenomen.

jrrsparkles

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Quote from: justcharlz on December 27, 2018, 02:26:30 AM

Hi guys,

Can anyone explain why tether falls below $1 dollar?
Also, most STC are centralized and dollarized, isn't that going back to reliance on fiat.

The concept behind the crypto currency prices were supply and demand so that coin have more suppy than the demand so its prices falling more so nothing is stable coin the prices used to be keep changing but I found USDC having more stable value than other stable coins so people may conider this for their future pupose.

justcharlz

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Thank you for the feedback. It make sense but I was thinking that since the creators like Bitfinex buys back each tether for $1, are they not liquid enough to cover high liquidations of say $500m?

el kaka22

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Quote from: justcharlz on December 27, 2018, 02:26:30 AM

Can anyone explain why tether falls below $1 dollar?
Also, most STC are centralized and dollarized, isn't that going back to reliance on fiat. Finally, since they're not blockchained, how do exchanges connect to their system, API?

Sometimes there is a bigger sale than the buyers are capable of covering and those times stablecoins go under 1 dollars each but thanks to arbitrage and knowing that price is stick to one dollars each and at least tokens worth that much people buy from those cheap amounts and cover that difference pretty quickly, anything slightly less or more like 98 cents or whatever is there because people really don't care about that much difference and also the exchange fee's wouldn't cover that difference so you would be losing money if you try to close that gap.

Also stablecoins are mostly useless worthless stuff that you don't really need, you could use the actual fiat instead and that is why its never getting too much attention from traders and sometimes suddenly drops when someone sells like 500 million USDT (like it happened couple months ago) and that causes it to go as low as 95 cents and even less.

dddudidd

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Don't be surprised by the instability of coins that were initially very stable. try to compare Theter with ETH. ETH is very strong in my opinion but why is ETH still not recovering and still below now.

chakhigh

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FRX: Ferocious Alpha

I think the only way and best approach to create stable coins/tokens is to back it with real store of value. So, backing it to fiat is not the answer. Instead, using Gold and precious metals, like in the current Gigzi project, to back crypto-assets is the best way to do it. This way, we can avoid the high volatility issue..

pilosopotasyo

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Have you checked the coinmarketcap I just checked it now and this is what I saw
$1.02 USD (-0.26%) 0.00026850 BTC (0.04%) 0.37844372 OMNI (-7.34%) yes they are down but not falling below $1 maybe they are down hours ago but they easily regain their true value.

JimmyNg90

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The "stable" concept is only relative. It was created to be a valuable storage object for crypto instead of directly exchange between crypto and fiat. If it is already a means of exchange, its value can still change.

IlVeroNico

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It's always because of a big discrepancy in Supply/Demand.

If there are too many people that want to sell USDT but not enough buyers the price will go down (the last time that it happened BitFinex had to burn a bit of Tether to keep it somewhat stable).

Now that there are multiple stablecoins you should be able to use another one if Tether is unstable

ned.ryerson

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This is not the first time that stable Coins become unstable. I don’t know the exact reason for what is happening, but I think this is related to providing real money. Is there is 1 mln Tether but in a bank only 800 thousand dollars so it will not be 1:1

justcharlz

newbie

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Merit: 0

Hi guys,

Can anyone explain why tether falls below $1 dollar?
Also, most STC are centralized and dollarized, isn't that going back to reliance on fiat.

Topic: Why StableCoin like Tether fall below $1? (Read 278 times)