By Mark Ackman
If the FTX exchange crash was not shocking enough for the cryptocurrency industry, it was definitely the slight de-pegging of Tether (USDT).
FTX Crash Caused a Panic
Due to the FTX exchange crash, a great panic was felt throughout the cryptocurrency industry. The situation took the worst turn as the investors started to liquidate and withdraw their crypto holdings.
On November 10, the trading price of Tether, the largest stablecoin ended up moving south. Its 1:1 peg ended up getting de-pegged with the USD.
However, the fear of the investors soon ended as the dollar peg returned to Tether. The situation was back to normal for USDT but in the time it took to recover, a great amount of damage had already been dealt.
USDT Price Fell to $0.96
The price chart for USDT shows that on November 10, its value fell to a low of $0.96, which was extremely unusual for Tether.
Although a great panic was recorded, the price of the USDT soon picked up and it was again neck to neck with the dollar peg.
However, the network ended up facing a great loss in terms of liquidation. The largest stablecoin reportedly saw $700 million leaving its platform, which is still quite alarming.
Redeemers Make a Profit
There is one thing to clear about the stablecoins, which is about their redemption. It is important to understand that even if a digital asset ends up losing its peg, it still has to honor it.
This clearly suggests that even if the price of a stablecoin falls to $0.96 while it is pegged with the dollar, the redemption would still bring in $1 for the redeemers.
Major Networks Lost Huge Funds
Due to the FTX exchange crash, two cryptocurrency fund managers ended up facing huge losses. These fund managers were Sequoia Capital and Coinshares.
The officials at Sequoia Capital revealed that their firm ended up losing $150 million in the wake of the FTX crash. On the other hand, Coinshares ended up losing $30 million due to the FTX exchange.
No Signs of Alarming Contagion
Although the FTX exchange has caused quite a ruckus in the entire industry, still, it has not caused much of a market contagion.
It means that none of the major assets in the crypto-verse have taken any significant impact from the crash.
Many senior analysts and market experts have been accusing the FTX exchange and its executives of misleading and mistreating the funds of the investors.
People have argued that FTX is neither a trading firm nor a lending firm for cryptocurrencies. Therefore, it had no right to use the funds of the investors to use on its lending and trading platforms.