Falling cryptocurrency prices aren’t the only consequence of FTX-induced crypto contagion this week.
Significant market volatility this week induced by the collapse of the FTX exchange has impacted stablecoins, with many temporarily de-indexing.
According For Julio Moreno, senior analyst at CryptoQuant, almost all major stablecoins have seen some level of peg volatility this week.
The world’s dominant stablecoin, Tether (USDT) temporarily fell to $0.97 on November 1. 10 as redemptions topped $600 million in the past two days, he noted.
CoinGecko is currently reporting that USDT is still slightly below its peg, trading at $0.998 at the time of writing.
Cointelegraph reported on the Tether depegging incident citing evidence that FTX and sister company Alameda Research were attempting to short USDT.
Crypto market volatility has increased significantly in recent days amid the fall of FTT/FTX.
How are stablecoins faring in this environment?
Tether’s price briefly dipped to $0.97 today as buybacks topped $600 million in the past 2 days. pic.twitter.com/52eAtBs3NP
— Julio Moreno (@jjcmoreno) November 10, 2022
Circle’s USD Coin (USDC) has also not been immune to volatility, with redemptions exceeding $1 billion. The stablecoin fell to $0.977 very briefly yesterday but quickly regained its peg, according to CoinGecko.
TrueUSD (TUSD) redemptions barely topped $1 million, Moreno noted, but that didn’t stop a depegging to $0.98 yesterday. The Pax Dollar (USDP) stablecoin fell to $0.96 as redemptions hit $100 million, he noted.
There was some volatility for the Binance stablecoin, BinanceUSD (BUSD), on the Gemini exchange, leading to a brief drop to $0.98.
Tron’s USDD algorithmic stablecoin is still far from its peg, currently trading at $0.973, according to CoinGecko. It fell as low as $0.952 yesterday at the height of volatility.
Concerns over the collateral backing the stablecoin are growing as Tron (TRX), which is used to buy back USDD, has fallen 12% since the start of the week. Justin Sun also accused FTX and Alameda of shorting USDD.
The unpecking incidents coincided with a slew of stablecoins leaving the FTX exchange on November 1. ten.
FTX Exchange (0x2faf) resumed transfer 1 hour ago.
A total of 99 transfers were made, with $4,433,330 stablecoins.
— Lookonchain (@lookonchain) November 10, 2022
Related: FTX crisis feeds Twitter rumor mill with hot takes and conspiracy theories
At the time of writing, most major stablecoins including USDC, BUSD, USDP, GUSD, and TUSD have reverted to their US dollar peg, meaning players in the Market fearing another slump Terra-like stablecoins can breathe again for now.
Markets recovered slightly from yesterday’s rout with a 5% gain in total market capitalization which once again exceeded $900 billion.