Cryptocurrencies are subject to high volatility due to its recent introduction into the markets and the manipulation of big whales. Stablecoins are not shielded against such consequence, including Tether (USDT). Back when Tether was the only stablecoin available and recognized among crypto users, its growth was exponential in the market, Bitcoin went up the sky and all related businesses started to emerge and grow from it.
While Tether remained without any knowledgeable competition for quite some time, the capacity of the market grew and generated millions of dollars for the entire industry. Tether grew in market capitalization and market size by millions and had people waiting for months to register on their platform in order to exchange dollars into Tether or cryptocurrencies into Tether. The parity system Tether offered opened the way for companies like Circle and Gemini Capital to create their own stablecoins today.
But what are stablecoins used for? 2018 has shown to be quite a volatile market, investors have looked for ways to safeguard their digital assets through Bitcoin, even though it crashed from $20,000 to $6,000, people still trust in its value. The purpose of stablecoins is basically to stabilize digital assets, not to represent an investment but to transition from one asset to another while volatile changes are happening on the scene. The issue with Tether today lays on the headlines, and the multiple claims that the stablecoin has been filled up with lies in regards to the funds that are supposed to back up Tether.
It’s without question that Tether has had quite an important role in the crypto market, thanks to its parity 1.1 with the U.S. Dollar and the stability it gave to a market filled with uncertainty, the role this cryptocurrency played was key to the scene we’re seeing today in the crypto sphere. However, the uncertainty of regulators across the world, and especially the SEC, and the claims of lack of funds and instability from Tether have led the market to lose its trust in Tether, making the coin lose its value. Even though Tether experienced a 5% loss in value within the last few days, it has managed to regain its price, reaching $0.99 at the time of writing this article.
The reason why Tether may never drop completely? Experts claim is just too big to fail. ICOs portfolio is extremely volatile, which is why they rely on cryptocurrencies like Tether to keep some sort of stability. Tether keeps on dominating the market simply because it’s the oldest stablecoin and the biggest, and its place could take years to be replaced.