With multiple banks going bankrupt due to the banking crisis in the US in the past weeks, this altcoin project has been the best haven for investors, according to data! Here are the details…
With the banking crisis, this altcoin is in the focus of investors!
Investors looking for a stable haven earlier this month after the banking problem that arose in the past weeks, as we quoted as Kriptokoin.com, revealed the often controversial Tether (USDT) stablecoin as their best bet. As you know, with the crisis after Silicon Valley Bank, which had collapsed in the past weeks, the revelation that some of the major players in the industry were exposed to the bank, resulted in USD Coin (USDC) falling to the level of $ 0.90 on March 11 and losing its 1 dollar fixed.
Among these players was US-based stablecoin issuer Circle, which, according to the firm’s latest reports, holds a portion of the USDC stablecoin’s cash reserves at Silicon Valley Bank as of Jan. However, decentralized stablecoin projects have also been hit hard. While both Frax and DAI appeared as decentralized coin projects, they lost their pegs to the dollar with the crashes.
Investors are turning to Tether: Entries have increased!
On the other hand, Tether (USDT) continues to stand out compared to other stablecoin projects. Despite a long-held opinion about the coin’s transparency among some market participants and concerns about parent company Tether Global, this interest from investors has left many experts hesitant. The data also shows that there has been at least $5 billion in inflows into Tether in the past weeks, pushing its market capitalization to over $77 billion as of Wednesday. Some say part of this is likely due to its supposedly low exposure to the US banking system.
Commenting on the subject, experienced analyst of FlowDesk, François Cluzeau, quoted the following words:
Tether is not subject to SVB because its popularity is mostly in the Asian region, which means that USDT does not rely on dollars held in American banks. This data makes it one of the safest stablecoins to return to right now.
After that, Cluzeau added, “We saw a lot of USDC and DAI being traded for USDT, keeping USDT liquid.”
On the other hand, P2P.org chief product officer Mitya Argunov said that the systemic risks of USDC are affecting the DAI stablecoin, further strengthening the thesis of holding various assets to support USDT. Argunov drew attention with the following words:
Tether’s performance during the crisis is largely due to its lack of direct exposure to the SVB. The bank only had no deposits in USDT. Other major stablecoins such as DAI have also emerged and are fixed indirectly because they are actually collateralized largely by USDC. However, the move to Tether as a safe-haven should also be viewed as a reliance on Tether’s portfolio risk management strategy.
“Tether showed itself in the middle of the crisis!”
However, some investors continue to be cautious in the long run. Danny Chong, co-founder of Tranchess, a crypto asset management protocol that can yield farming, swapping, lending and staking, built on the Binance Smart Chain blockchain, which is known as a kind of interest-earning model in DeFi, said, “Looking at the history of Tether, “It has had FUD and redemption issues in the past and has remained stable amid the current market turmoil.”
While “Tether’s ability to maintain stability through recent challenges shows it may have a chance of long-term success,” Chong added, further stress testing will reveal whether it remains “resilient in the long run”. Chong said that the altcoin USDC quickly recovered its peg to $1 the following week, demonstrating the effectiveness and durability of its hedging strategy by collaborating with its banking partners. However, the demand for stablecoins has not waned. Tranchess co-founder’s words are as follows:
“The fact that Circle’s USDC has recovered its peg to the dollar following the announcement of a bailout reaffirms how much the market values the potential for stablecoin businesses.”
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