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For essentially everybody who is interested in the crypto sphere, Tether (USDT) has captured a lot of focus and discussions recently. The stablecoin that’s supposed to be tethered to the USD was involved in multiple controversies amidst issuance of more and more tokens into the crypto market and growing trading volumes.
But over the past 24 hours, something quite unusual happened… something that’s currently still quite unclear. Tether plummeted to its lowest price since April 2017, and now it stands at around $0.963 after it had already fallen to a chasm of $0.925 earlier today. Again, as a small reminder, Tether is designed to stand at a fixed ratio of 1:1 against the USD; therefore, each small drop is tremendously significant.
Take a look for yourself at Tether’s price since April 2017:
So what is actually happening to Tether and why does it suddenly drop? At this point, it’s still very hard to tell – especially since there hadn’t been any meaningful news regarding the stablecoin prior to the plunge. There are, however, some speculations out there.
One compelling and logical theory explains that the steep decline is the result of increasing competition in the arena of stablecoins (which according to recent analysis is now worth around $3 billion) – particularly from the crypto factory of the Winklevoss twins and their own stablecoin, the Gemini dollar.
According to Bloomberg:
Still, now that traders have several stablecoins to chose from, some may decide to dump Tether in favor of alternatives such as the Gemini dollar, a brainchild of Cameron and Tyler Winklevoss, said Jehan Chu, managing partner at blockchain investment and advisory company Kenetic Capital. Paxos Standard, another stablecoin linked to the dollar, was trading at $1.06 versus Tether on Binance.
Whilst the reason behind Tether’s nose-dive has yet to reveal itself, one thing is for sure: the stablecoin is not that stable anymore.