Tether (USDT), the world’s largest stablecoin, briefly dropped 5% on Thursday, falling as low as $0.95.
Data from CoinMarketCap shows the stablecoin has recovered some but is still trading at $0.98. It has a market capitalization of more than $81 billion.
Tether’s volatile price action comes amid a tumultuous week for the industry. Earlier this week, Terra’s stablecoin UST imploded and
market leader Bitcoin dropped a steep 10%.
Once the third-largest stablecoin, UST first de-pegged by just a few cents last weekend.
Since then, however, its collapse has been monumental. It briefly fell as low as $0.2998, a 71% decline from its dollar peg, on May 11, 2022.
The coin currently trades at $0.62, according to data from CoinMarketCap.
USDT and UST are two different types of stablecoins. UST is an algorithmic stablecoin controlled by smart contracts, and USDT is backed by Tether’s reserves.
One USDT is issued for one dollar’s worth in an equivalent asset deposited into Tether and vice-versa. According to Tether’s transparency report, these assets include cash, corporate bonds, commercial paper, and other assets.
Other stablecoins, including Circle’s USDC and Binance’s BUSD, which are also pegged to the dollar, are trading at a slight premium against USDT.
