One of the most popular USD-backed cryptocurrency stablecoin Tether (USDT) is experiencing quite tough time. Tether’s market cap is on a steep fall over the last week, dropping from $2.7 billion to less than $2.2 billion at the press time. According to the charts on CoinMarketCap, there is more than 20% uprooting in Tether’s valuations in the last week.
Over $550 Million USDT Tokens Pulled Out of Circulation
During the first half of October 2018, Tether pulled out hundreds of millions of dollars worth USDT tokens in circulation. This withdrawal of Tether tokens from the crypto market is likely to be the major reason behind the fall. Yesterday, on October 16, Tether added a total of 250 million USDT tokens to its treasury.
This is because Bitfinex crypto exchange sent two payments of 200 million and 50 million to Tether’s treasury address. This information is based on the Blockchain data provided by Omni, a second-layer protocol on the Bitcoin blockchain which provides infrastructure to Tether (USDT) tokens.
Last week, Bitfinex sent nearly $300 million worth USDT tokens to the Tether treasury address. On October 9, Bitfinex sent $100 million USDT tokens followed by another $200 million on October 14. Note that Bitfinex shares the same management with Tether which is also one of the reasons causing the transparency concerns for Tether.
In a word with CoinDesk, Bitfinex’s communications director Kasper Rasmussen said that “the supply of USDT decreases upon redemption.”
“Hypothetically, when the supply of USDT on Bitfinex surpasses a certain level required for maintaining operations (i.e. a seamless flow of deposits and withdrawals), a batch of USDT would be sent from Bitfinex to Tether for redemption against fiat USD. This subsequently lowers the circulating supply of USDT whilst the fiat USD previously held by Tether goes to the redeeming party.”
More Trusted Stablecoin Alternatives to Tether
Crypto trades often use stablecoin to quickly execute their trades in the crypto market. Moreover, it also eliminates the hassle of undergoing crypto-to-fiat conversion every time while making the trade. However, the controversial operations of Tether have caused several professional traders to seek alternate and trusted stablecoin options in the market.
Previous reports suggest that Tether tokens were used by Bitfinex to artificially inflate the price of Bitcoin. Later, Tether and Bitfinex both have refuted the claims. However, a number of stablecoin projects released over the last few months have given traders better alternatives to Tether.
Crypto exchange Gemini and Paxos recently unveiled their own stablecoins versions. Called as the Gemini Dollar and Paxos Standard Stablecoin, both are pegged to the U.S. Dollar in 1:1. Both of them are considered as more trusted stablecoin options reason being they are approved and regulated by the New York Department of Financial Services (NYDFS).
Moreover, as Tether controversy continues to gain steam, crypto exchange are switching to these alternatives. Recently, OKEx exchange added support for four new stablecoins: TrustToken’s TrueUSD (TUSD), Circle’s USDCoin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard Token (PAX).
Gemini Dollar Gains Momentum As Tether Sinks
As expected, a more trusted Tether alternative – Gemini Dollar (GUSD) is now hogging the limelight. As Tether’s valuation continued to sink, Gemini Dollar made its new all-time high of $1.19 on Tuesday. At the press time, GUSD is trading at $1.02 according to the data on CoinMarketCap.