Tether’s stablecoin has once again lost its dollar peg after Celsius Network announced the freezing of withdrawals and transfers between accounts for its 1.7 million users.
USDT which is supposed to be pegged to a fixed value of $1, went as low as $0.9975 and was hovering around the price region of $0.9988 by Tuesday morning.
Unlike other tokens, stablecoins derive their value from being pegged to another asset like a fiat currency or even precious metal. This is supposed to make them less volatile, which provides investors with an opportunity to stack up their cash during a market downturn.
But this is not the first time that USDT has lost its $1 peg. Last month, during the Terra LUNA crash, USDT slipped to as low as $0.9959, according to CoinMarketCap.
Finance professor of the Sussex University Carol Alexander told Insider that Tether’s stablecoin is helping to fuel the bitcoin bubble, and there would be a knock-on effect on Bitcoin and other cryptos if its dollar reserve proves to be a candyfloss.
Three other dollar-pegged stablecoins – Fei USD, Neutrino USD, and Tron’s USDD, also slipped away after the announcement from Celcius, losing the 1$ peg.
Featured image source: Currency.com
