tether

The total crypto market cap drops under $1.2T, but data show traders are less inclined to sell

An improving Tether discount in Asian markets and positive futures premiums for BTC and ETH suggest a slight recovery is in the making.

The total crypto market capitalization has been trading in a descending channel for the past 29 days and currently displays support at the $1.17 trillion level. In the past seven days, Bitcoin (BTC) presented a modest 2% drop and Ether (ETH) faced a 5% correction.

*Total crypto market cap, USD billion. Source: TradingView*

The June 10 consumer price index (CPI) report showed an 8.6% year-on-year increase and crypto and stock markets immediately felt the impact. Still, it’s not certain whether the figure will convince the United States Federal Reserve to hesitate in future interest rate hikes.

Mid-cap altcoins dropped further, sentiment is still bearish

The generalized bearish sentiment caused by weak macroeconomic data and uncertainties regarding the Federal Reserve’s ability to curb inflation has severely impacted crypto markets.

The Fear and Greed Index hit 11/100 on June 9, and the data-driven sentiment gauge has been below 20 since May 8.

*Crypto Fear & Greed Index. Source: alternative.me*

This persistent “extreme fear” reading indicates that investors are worried, but, at the same time, it supposedly presents a buying opportunity.

Below are the winners and losers from the past seven days. While the two leading cryptocurrencies presented modest losses, a handful of mid-capitalization altcoins declined by 14% or more.

*Weekly winners and losers among the top 80 coins. Source: Nomics*

Helium’s (HNT) community approved the HIP-51 proposal, covering the economic and technical constructions required to support new users, devices and different types of networks, including cellular, VPN and WiFi.

Chainlink (LINK) rallied 22% after the developers released a revamped Chainlink 2.0 roadmap, including native token staking.

Theta Token (THETA) gained 9.7% as the network announced livestream support using API technology which enabled instant and easy connection to apps and websites.

WAVES lost 28% after the $1,000 daily withdrawal limit for stablecoins in Vires Finance was implemented to avoid further pressure on the Neutrino Protocol Stablecoin (USDN).

Data shows traders are less inclined to sell at the current levels

The OKX Tether (USDT) premium is a good gauge of China-based retail crypto trader demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.

*Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX*

On May 31, the Tether price in Asian peer-to-peer markets entered a 4% discount, signaling intense retail selling pressure. Curiously, the situation improved on June 10 after the indicator moved to a 1.5% discount. Despite remaining negative, the metric shows investors’ willingness to buy the dip as the total crypto capitalization dropped below $1.2 trillion.

To exclude externalities specific to the Tether instrument, traders must also analyze the cryptos futures markets. Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Accumulated perpetual futures funding rate on June 10. Source: Coinglass*

Perpetual contracts reflected mixed sentiment after Bitcoin and Ether held a slightly positive (bullish) funding rate, but altcoin rates were negative. For example, BNB’s negative 0.20% weekly rate equals 0.8% per month, which is generally not a concern for derivatives traders.

Any recovery depends on macroeconomic data stabilizing

According to derivatives and trading indicators, investors are less inclined to reduce their positions at current levels, as shown by the modest improvement in the Tether premium.

The positive funding rate for Bitcoin and Ether futures displays traders’ growing appetite for leveraged long positions as the total crypto capitalization broke below $1.2 trillion.

Unless the traditional markets and macroeconomic scenario deteriorates, there is reason to believe crypto investors are expecting a positive price move soon.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Tether is ‘instrument of freedom’ and ‘Bitcoin onramp,’ says Bitfinex CTO

Paolo Ardoino, chief technology officer of Bitfinex and Tether, made the case that Tether is a tool for human rights during the World Economic Forum in Davos, Switzerland.

On a sun-splashed day in the Swiss Alps, the chief technology officer of Bitfinex and Tether, Paolo Ardoino, shed light on the Plan B Lugano strategy, Tether as an onramp into Bitcoin (BTC) and —crucially — his favorite pizza toppings.

Fresh off the plane from Norway, where Ardoino attended an increasingly Bitcoiner-friendly event, the Oslo Freedom Forum, the Italian explained that, in contrast to the WEF,there was no “shilling” in Norway.

Tether was invited to speak at the Oslo Freedom Forum as the stablecoin is increasingly considered an “instrument of freedom.” Tether has been adopted by the Myanmar government while the Ukrainian government has accepted crypto donations, including Tether, since the onset of the Russia-Ukraine war.

“Tether is one of the tools to be used by distressed countries where the national currency is devaluating—where people want an edge against insane inflation.”

Ardoino cites Turkey and Argentina as examples. The Turkish lira has lost 50% of its purchasing power and crypto, often seen as a hedge against uncertain currencies, is experiencing a second wave of interest. Ardoino also conceded that:

“Bitcoin is great but they want the price stability, the long-term price stability. […] “Bitcoin is great for many things but it’s not yet understood by many.”

Regarding the Plan B strategy in Lugano, where Bitcoin and Tether are de facto legal tender in the Swiss city, Ardoino shared that educational models in Switzerland are being shared across to El Salvador.

“Bitcoin is for everyone. You have people in a poor country that need Bitcoin as the basic financial infrastructure. On the other side, you have a country with the most banks in the world, and they still need Bitcoin.”

Ardoino also critiqued Satoshi Nakamoto’s choice of pizza toppings. Bitcoin Pizza Day occurred the day before the WEF, a day where Bitcoiners around the world eat and attempt to pay for pizza with Bitcoin. The creator of Bitcoin, Satoshi Nakamoto, famously enjoyed pineapple and jalapeños on pizza, to which Ardoino commented, “nobody is perfect.”

Tether is an ‘instrument of freedom’ and ‘Bitcoin onramp,’ says Tether CTO

Paolo Ardoino, chief technology officer of Bitfinex and Tether, made the case that Tether is a tool for human rights during the World Economic Forum in Davos, Switzerland.

“Tether is one of the tools to be used by distressed countries where the national currency is devaluating—where people want an edge against insane inflation.”

“Bitcoin is great but they want the price stability, the long-term price stability. […] “Bitcoin is great for many things but it’s not yet understood by many.”

“Bitcoin is for everyone. You have people in a poor country that need Bitcoin as the basic financial infrastructure. On the other side, you have a country with the most banks in the world, and they still need Bitcoin.”

Tether deploys new USDT token on the Tezos blockchain

The asset will also be available on 12 other networks, including Ethereum, Solana and Polkadot, among others.

Leading cryptocurrency stablecoin Tether has announced the launch of a new asset, Tether (USDT) tokens, built on the Tezos blockchain, and with the ambition of expanding its digital footprint across the digital payments and decentralized finance (DeFi) sector.

According to the press release, “USDT on Tezos will power revolutionary applications across payments, DeFi, and more.” In conversation with a Tether representative, greater context was provided as to the intended utility of Tether tokens:

“Tether tokens are not an investment but a utility for engaging in internet commerce, combating volatility, and providing a safe haven for remittances. Tether tokens can be securely stored, sent, and received across the blockchain and are redeemable for the underlying asset, subject to the terms of service and fee schedule.”

The representative continued on to reveal the names of the 12 blockchains, including Tezos, on which the asset will become accessible.

“Tether currently supports transfers on a diverse and growing list of blockchains including Solana, Ethereum, Kusama, Avalanche, Polkadot, Algorand, EOS, Liquid Network, Omni, Tron and Bitcoin Cash’s Standard Ledger Protocol.”

Tether chief technology officer Paolo Ardoino spoke highly of the launch, anticipating that it will support Tether’s growth across the coming years.

“Tezos is coming fast onto the scene and we believe that this integration will be essential to its long-term growth.”

These are the least ‘stable’ stablecoins not named TerraUSD

Some stablecoins have failed to deliver the dollar’s stability to crypto traders long before TerraUSD’s collapse.

The recent collapse of the once third-largest stablecoin, TerraUSD (UST), has raised questions about other fiat-pegged tokens and their ability to maintain their pegs.

Stablecoins’ stability in question

Stablecoin firms claim that each of their issued tokens is backed by real-world and/or crypto assets, so they behave as a vital component in the crypto market, providing traders with an alternative in which to park their cash between placing bets on volatile coins.

They include stablecoins that are supposedly 100% backed by cash or cash equivalents (bank deposits, Treasury bills, commercial paper, etc.), such as Tether (USDT) and Circle USD (USDC).

At the other end of the spectrum are algorithmic stablecoins. They are not necessarily backed by real assets but depend on financial engineering to maintain their peg with fiat money, usually the dollar.

*UST/USD daily price chart. Source: TradingView*

However, following the collapse of UST—an algorithmic stablecoin, that stability is now in doubt.

The distrust has led to massive outflows from both asset-backed and algorithmic stablecoin projects. For instance, the market capitalization of USDT has fallen from $83.22 billion on May 9—the day on which UST started losing its U.S. dollar peg—to $72.49 billion on June 2.

USDT drifted from its one-to-one dollar parity while suffering outflows, albeit briefly. Unfortunately, that is not the case with algorithmic stablecoins; some are still trading below their intended fiat pegs, as discussed below.

USDX

USDX, the Kava Network’s native “decentralized” stablecoin, was notorious for mostly trading $0.02–$0.04 cents below the dollar. But, it moved further away from its near-perfect peg with the greenback amid the TerraUSD debacle.

In detail, USDX dropped to its lowest level on record—at $0.66—on May 12. The USDX/USD pair has been attempting to reclaim its dollar peg ever since and was changing hands for around $0.89 on June 2, as shown below.

*USDX price chart year-to-date. Source: CoinMarketCap*

Simultaneously, USDX has witnessed outflows worth $60 million since May 9, illustrating that traders are redeeming their tokens.

Kava Labs, the development team behind Kava Network, noted that USDX lost its dollar peg due to its exposure to UST as one of its collaterals. Meanwhile, a decline across USDX’s other reserve assets, including KAVA, Cosmos (ATOM), and Wrapped Bitcoin (WBTC), also shook its stability.

1/ $UST has (obviously) significantly de-pegged and has promulgated some risk to downstream protocols that use it. The UST risk in Kava is isolated and can be tolerated with current system parameters.

— Scott Stuart (@Scott_Stuart_) May 11, 2022

In May, Scott Stuart, the co-founder and CEO of Kava Labs, asserted that USDX would retain its dollar peg after they flush UST out of their ecosystem.

VAI

Vai (VAI) is another victim of the ongoing stablecoin market rout.

The algorithmic stablecoin, built on the Binance Smart Chain-based Venus Protocol — a lending platform, traded for $0.95 this June 2. However, like USDX, the token is notorious for trading below its intended dollar peg since launch.

For instance, in September 2021—long before the TerraUSD’s collapse, VAI had dropped as low as $0.74. In addition, the depeg scenario occurred after Venus Protocol suffered a $77 million loss on bad debts in May 2021 due to large liquidations in its lending platform.

*VAI price chart to date. Source: CoinMarketCap*

The market cap of VAI was $272.84 million in May 2021. But after the Venus debt fiasco, coupled with TerraUSD’s collapse, VAI’s net valuation dropped to almost $85 million, suggesting a substantial plunge in its demand.

Some stable exceptions

Dai (DAI), an algorithmic stablecoin native to Maker—a peer-to-contract lending platform, performed exceptionally well versus its rivals, never fluctuating too far from its promised dollar peg even though witnessing a 20% decline in its market capitalization since May 9.

*DAI market cap year-to-date. Source: CoinMarketCap*

FRAX and MAI, other algorithmic stablecoin projects, also maintained their dollar peg during TerraUSD’s crash.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Binance’s CZ says he is ‘skeptical’ about the Terra relaunch

Binance CEO CZ voices skepticism around the relaunch of the Terra blockchain and its new LUNA token following the latest fiasco.

Binance CEO Changpeng Zhao, also known as CZ, expressed skepticism around the revival plan for the Terra ecosystem and the launch of the new LUNA token.

“I try not to predict what the community will do. […] Many are skeptical. I’m one of those guys,” said CZ in an exclusive interview with Cointelegraph.

Following the collapse of TerraUSD (USD), the Terra ecosystem’s stablecoin, CZ criticized its team for not handling the crisis properly and pointed at the project’s flaws that led to the crash. Still, Binance is now actively participating in Terra’s revival plan by hosting the airdrop of its new LUNA token.

As CZ pointed out, despite the widespread skepticism around the Terra relaunch, Binance has a responsibility to help users affected by the crash of LUNA.

“We still need to ensure continuity of people’s access to liquidity. […] We have to support the revival plan hoping that it may work,” he explained.

According to CZ, the Terra fiasco should serve as a warning to projects that rely on unsustainable business models based on “aggressive incentives.”

As he pointed out, crypto projects such as Terra offer high yields to attract people in the hopes that once there are enough users, they will become profitable.

“We should really look at them in a fundamental way to measure that more revenue, more income is generated than just an incentive payout,” CZ pointed out.

Check out the full interview on Cointelegraph’s YouTube channel, and don’t forget to subscribe!

Tether’s reported bank partner Capital Union shares its crypto strategy

Tether stablecoin’s reported bank partner Capital Union supports a large variety of digital assets as part of its trading and custody services.

Capital Union, a Bahamas-based bank that reportedly holds a portion of reserves by the Tether (USDT) stablecoin issuer, has been actively involved in the cryptocurrency industry.

The banking institution has rolled out crypto trading and custody services to its professional clients as part of the bank’s trading desk, a spokesperson for Capital Union told Cointelegraph on Tuesday.

“We work with a few selected trading venues and liquidity providers and a handful of custodians and technology providers, which allows us to support a large variety of digital assets as part of our trading and custody services,” the firm’s representative said.

Capital Union’s crypto-related services still represent a “fairly small portion” of its business, which is mainly focused on providing traditional wealth management and investment services, the representative noted.

The spokesperson did not elaborate either on what cryptocurrencies are supported on Capital Union’s platform or when they were launched, stating:

“We do not have a directional view on crypto markets or on any specific coins but as a forward looking financial institution have chosen to enable our professional clients to trade in this new asset class should they desire to do so.”

According to the representative, Capital Union has also been working actively on developing “transactional blockchain related capabilities” as the bank expects this to be an area of “significant disruption for the financial industry.”

Capital Union’s latest crypto-related remarks follow a Monday report claiming that Tether held some of its reserves at the Capital Union bank. The company’s representative declined to confirm or deny the bank’s involvement in Tether’s operations to Cointelegraph, citing confidentiality reasons. The only publicly available information from the bank is included in Capital Union’s annual reports, the person added.

Founded in 2013, Capital Union managed $1 billion of assets by the end of 2020. The bank partnered with Chainalysis in April 2022 to ensure the safe and compliant rollout of its crypto solutions like trading and custody. According to the bank’s spokesperson, the Bahamas was one of the first nations to adopt a regulatory framework known as the DARE Act in 2020.

“As a locally regulated bank, this allows us to offer crypto-related services to our clients, which are financial institutions, financial intermediaries and professional investors,” Capital Union’s representative said.