Last Updated: 29 June 2022
Paolo Ardoino, chief technology officer (CTO) of Tether, told the shocking news yesterday that several cryptocurrency companies tried to short USDT. This means that these companies expect Tether’s stablecoin to drop in price. Is this possible?
Drop of 6%
Currently, this currency is still on par with the dollar, although it was different for a while. During the fall of TerraUST, Terra’s stablecoin, USDT did not have it easy either. This currency dropped no less than 6% while UST collapsed completely. Therefore, it is not entirely illogical that companies saw the opportunity to short.
Companies cause panic
The Tether CTO told us that he has been candid about these attempts by some hedge funds. According to him, these companies tried to “cause further panic in the market” after the collapse of Terra (LUNA) and TerraUSD.
I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.
It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. https://t.co/hhcsgHV1Ow
— Paolo Ardoino (@paoloardoino) June 27, 2022
This panic could cause complete chaos in the market, as we often see when the price of bitcoin takes a big hit. At that point, many people are doom-mongers, and if companies go along with this, it often causes a snowball effect of panic. “It really seemed like a coordinated attack from the start, with a new wave of FUD, troll armies, clowns and so on,” Ardoino tweeted.
Tricks to disconnect value
The CTO explained that hedge funds were trying various tricks to drive down the value of stablecoin. If they had succeeded, hedge funds would have created billions of dollars worth of “pressure,” which would have caused the price of USDT to decouple and — in this scenario — allow them to buy USDT back at a lower price.
So far, they have not succeeded in doing so, and the value of Tether now has the same price as one US dollar. Exactly as it should be, and if we are to believe Ardoino, this would not happen either. He has debunked all rumours on Twitter about an unstable USDT, but whether we can believe him is another matter.
Tether is often the victim of many rumours, and that is actually not very strange. Due to the vague (Dutch) owner and insufficient transparency at crucial moments, Tether (perhaps unconsciously) caused people to have less confidence in this stablecoin.