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Tether Investors Redeem $10 Billion Worth of Tokens Since Crypto Rout

Tether Investors Redeem $10 Billion Worth of Tokens Since Crypto Rout
  • Tether investors have withdrawn $10 billion from the stablecoin since the crypto market crash earlier in May.
  • $1 billion worth of tokens were redeemed on Saturday, and another $1.5 billion three days ago, according to The Guardian.
  • The withdrawals indicate indecision about the future of Tether, as concerns remain about the strength of the stablecoin.

Tether has paid out $10 billion in withdrawals to investors since the crypto market crash earlier in May, causing the stablecoin to lose its peg to the dollar.

Of that, $1 billion was recovered from the tether over the weekend, and $1.5 billion three days earlier, according to an analysis of blockchain data reported by The Guardian.

The withdrawals indicate hesitation among investors about the future of Tether, even though the stablecoin has regained its peg to the dollar and its issuer has vowed to continue paying large redemptions. The collapse of TerraUSD (UST) earlier this month has cast doubt on the strength of stablecoins and their value as a less volatile store of value in the crypto market.

Tether, the third largest cryptocurrency with a market capitalization of $73 billion, is designed to easily replace one-to-one with the US dollar. Its issuer maintains the peg by backing both the US dollar currencies into bank accounts and other stable assets.

But the token broke its peg and fell to $0.95 on May 12, as the cryptocurrency markets tumbled on the back of the crash in UST and Luna token in a “death spiral.” Tether has since recovered from its biggest drop since March 2021, trading just below the $1 mark on Monday, according to CoinMarketCap data.

Tether’s reserves, and its ability to redeem the token as promised, came under scrutiny after a series of audits revealed that the stablecoin was not fully backed by the US dollar as the issuer initially claimed. Investors have long questioned the reserves of the Tether to support its dollar peg.

Earlier in May, after the supply of Tether in circulation fell to $7 billion, Tether’s chief technology officer argued that the redemptions were a sign of strength in the stablecoin.

“We got 7B back in 48 hours, without the blink of an eye. How many institutions could do the same?” Paolo Arduino, Tether’s chief technology officer, said on Twitter. “We can go on if the market wants, we have all


To handle large paybacks and 1:1 payouts. Yes, Tether is fully supported.”

In its latest audited accounts, published Thursday, the stablecoin issuer said it now holds $286 million in short-term non-US government debt as part of its reserves, and has reduced its holdings of commercial paper — a form of unsecured short-term corporate debt — in favor of bonds. Cabinet.

Tether has reduced its holdings of commercial paper by nearly $4 billion since it was last legalized in February. It now has $20 billion in cash in commercial paper, $7 billion in money market funds, and about $40 billion in US Treasuries in its reserves, according to The Guardian.

A collapse in Tether would be catastrophic for the broader crypto market, and could prompt investors to liquidate other positions, according to GlobalBlock analyst Marcus Sotiriou and other analysts.

“If retracements continue at this pace and Tether cannot meet them, we could see a nuclear winter in cryptocurrencies,” FXEmpire analyst AJ Thorson said.

Tether did not immediately respond to Insider’s request for comment.

Read more: Retailers are getting burned and even big gamers are taking a hit from limited decryption, according to a co-founder of the crypto store. Here are the two catalysts that can revive interest in retail – and a safe haven

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