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Recently, the highly volatile cryptocurrency market has experienced a drastic storm from the popular stablecoin, Tether. Tether collapsed from providing stability in the cryptocurrency price and went below US$1. It has drastically affected millions of crypto wallets in which Tether was supposed to drive profit by removing the high volatility. Now, Tether's dollar peg has been reinstated. Still, crypto investors are ready to flee the stablecoin due to the break in the trust for stability.
The Tether peg was generally known to stay at US$1 since October 2014. This stablecoin was known for being backed by different types of digital assets. Crypto investors used to acknowledge the minimal volatility and convenience in the highly volatile cryptocurrency market. Tether price declined as low as 95% on multiple popular cryptocurrency exchanges leading to panic among crypto investors.
Tether was supposed to be backed by loads of money stored in the reserve to ensure crypto investors that they can receive the money during the withdrawal efficiently and effectively. There are concerns among crypto investors about whether this stablecoin has sufficient assets to take back its position to the US$1 peg. The current price of Tether is US$0.999 with a market cap of US$67.43 billion and a volume of US$51.41 billion.
Crypto investors have realized that stablecoins are just unsecured as well as unofficial security that can get affected just like other cryptocurrencies like Bitcoin and Dogecoin. Even though crypto investors have started fleeing from making smart investments in stablecoins, governments have become strict with the owners of stablecoins. It has stated that providers should be transparent about their whole liquid asset holdings.
After the sudden drastic fall of Tether and Terra, some popular crypto exchange platforms stopped transactions related to those stablecoins. Crypto investors have a strong understanding that stablecoins are struggling to reach the US$1 mark as usual in the cryptocurrency market. But they have lost the faith in the stability and security that were guaranteed by the stablecoin for such long years. Thus, despite Tether's dollar peg reinstation, crypto investors are ready to flee the stablecoin to ensure profit in crypto wallets.
Meanwhile, Bitcoin is also drastically falling and has reached the US$20k level from the US$68k since November 2021. The continuous crypto crash has generated fear among crypto investors, instigating them to flee.
