Tether has become the safest stablecoin during the banking crisis: Analyst | coindesk JAPAN | Coindesk Japan

The often-controversial stablecoin Tether (USDT) has emerged as the best bet for traders seeking a stable haven following a series of banking troubles in the United States.

USD Coin (USDC) fell below 90 cents on March 11 after the collapse of Silicon Valley Bank (SVB) revealed that major players in the industry had exposure to the bank.

This includes US-based stablecoin issuer Circle, whose latest testimony showed that as of January 17, a portion of USDC’s cash reserves had been transferred to SVB. was held by

Decentralized stablecoins also took a hit, with FRAX and DAI, which are backed by a basket of tokens, falling a few cents off the dollar peg.

what worked to your advantage

However, Tether continued to perform strongly, trading at a premium within a few days. This comes despite some market players having previously raised concerns about the token’s asset backing and concerns about its parent company, Tether Global. .

In addition, at least $5 billion has flowed into Tether over the past few weeks, bringing its market cap to more than $77 billion as of March 22nd. We also have data.

Some say this is partly due to Tether’s low exposure to the US banking system.

“Due to Tether’s popularity in the Asian region, there is no exposure to SVB and USDT is not dependent on dollars held in American banks, making it one of the safest stablecoins today.” François Cluzeau, head of trading at Flowdesk, told CoinDesk.

“We see a lot of USDC and DAI trading with USDT, which keeps USDT liquid,” Clouseau said.

Mitya Argunov, Chief Product Officer of P2P.org, said, “USDC’s system risk will also affect the DAI stablecoin, holding various assets to underpin the stablecoin. We’ve further strengthened the Tether thesis.”

Argunov added, “Tether’s performance in the crisis was largely due to its lack of direct exposure to SVB. Stablecoins have also been indirectly affected and depegged, as they are in fact largely backed by USDC.”

“But the escape to Tether as a safe haven should be seen as a confidence in Tether’s portfolio risk management strategy,” Argunov added.

still need attention

Meanwhile, some developers remain cautious in the long run.

“If you look at Tether’s history, it has experienced FUD and redemption issues in the past and remains stable in the current market turmoil,” said Danny Chong, co-founder of Tranchess. told CoinDesk.

“Tether’s ability to maintain stability amid recent challenges suggests its potential for long-term success,” Chong said, adding that further stress testing “whether it is resilient over the long term.” ” would be shown.

The USDC also quickly recovered its peg the following week, demonstrating the effectiveness and resilience of its hedging strategy in collaboration with its banking partners, Chong said.

Demand for stablecoins is undiminished.

“The USDC’s swift recovery of the peg after Circle announced its recovery plan further confirms how the market is assessing the potential of the stablecoin business,” said Chong.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: ShutterStock
｜Original: Tether Stability Made It the Safest Stablecoin Bet Amid US Banking Crisis, Analysts Say