Tether Price Prediction: Will USDT Collapse Like UST?

This article will take a shot at Tether price prediction amid ongoing FUD around stablecoins. All the stablecoins have been under the microscope since the crash of Terra UST. However, most of the ongoing fear, uncertainty, and doubt surround US Dollar Tether as it is the biggest stablecoin in the market. Furthermore, since most cryptocurrencies are paired against USDT on exchanges, Tether crypto acts as a liquidity floor for these coins.

What is Tether?

Tether is a stablecoin issued by Tether Limited. It is a Hong Kong-based entity founded by the owners of Bitfinex Exchange. The company claims that the real world US Dollar fully backs every Tether coin. Nevertheless, crypto analysts have always been sceptical about this claim as the company has never gone through an independent audit.

In 2021, Tether management disclosed that the company has heavily invested in US commercial paper. In fact, the commercial paper amounted to almost half of the company’s total reserves. The report also stated that the company held 18 % in fiduciary deposits and more than 12% in secured loans. In addition, the company also held more than 10% in corporate bonds and only 2.9% in cash. While this proved to be a sigh of relief for many investors, some also criticized the company’s massive exposure to commercial paper.

Tether Price Prediction                       

On 12th May 2022, crypto markets crashed as the Bitcoin price dipped to the $24,500 level. During this bloodbath, many investors ran towards safe havens like stablecoins and fiat. During this time, USDT crypto faced a massive sell-off as the investors preferred other stablecoins. Consequently, USDT lost its value in terms of other stablecoins like USDC and BUSD as the Tether price hit $0.95 on exchanges. Although this ‘de-pegging’ was short-lived and Tether recovered immediately, it shook the investors’ faith in Tether.

Latest Tether Reserve Breakdown

Our Tether price prediction is that the coin is likely to keep its peg despite recent events. This is because the company has become more transparent by keeping the holders updated about its reserves. As per Tether news today, it has already cut its commercial paper holdings by 17% in Q1. In addition, it has reduced its exposure by another 20% since April 2022. The quarterly Tether reports also have attestation from independent auditing firm MHA Cayman.

The Tether team’s recent commitment to transparency strengthens the fact that it is here to stay. Nevertheless, analysts and regulators still have many concerns about the top stablecoin issuer. Therefore,  it is better to diversify your stablecoin holdings across multiple assets like USDC, BUSD, GUSD and TUSD.

USDT VS USDC Price Chart

Tether Price Chart (4h)