Nowadays, more and more investors are worried that Coin An may follow the footsteps of FTX and become the next bankrupt currency giant.Data shows that, up to now, the original token BNB of Coin Security in the cryptocurrency exchange has fallen by nearly 15% in the past day and nearly 21% in the past week, the lowest level since July
Nowadays, more and more investors are worried that Coin An may follow the footsteps of FTX and become the next bankrupt currency giant.
Data shows that, up to now, the original token BNB of Coin Security in the cryptocurrency exchange has fallen by nearly 15% in the past day and nearly 21% in the past week, the lowest level since July. According to CoinMarketCap, BNB was first issued in 2017 and is the world's fifth largest cryptocurrency by market value, with a market value of approximately $39 billion, second only to Bitcoin, Ethereum, Tether, and USDCoin.
In addition to Coin An, another major issue in the coin industry may be the stable currency USDT.
The so-called USDT is a stable currency issued by Tether, and it is not the most valuable cryptocurrency, nor is it the most likely cryptocurrency to make investors rich. Tether simply promises that if you give it one dollar, it will give you a token that is almost always worth one dollar. This practicality makes it the most widely traded digital token in cryptocurrencies. After the collapse of the FTX exchange, USDT also became the focus of attention, and its chain reaction continued to have an impact on the entire industry.
USDT is the largest stable currency to date, with a current circulation of approximately $65 billion. The stable currency after USDT is USDC, with a circulation of approximately $42 billion; At the same time, Bitcoin and Ethereum are the only cryptocurrencies with market capitalization exceeding Tether. Investors can use stable currency as a simpler entry point for purchasing cryptocurrency, or trade between different tokens. Their price stability makes trading easier.
USDT can exchange over 4000 other cryptocurrencies on centralized exchanges, and the amount exchanged may be higher on decentralized exchanges that do not always accept regular US dollars. Therefore, in many cases, it is difficult for traders to participate in investing in the cryptocurrency market without using USDT. If USDT faces the problem of reducing its attractiveness or usage, it may lead to a chain reaction across the industry and significantly suppress transaction volume.
What are the market's concerns about the USDT issued by Tether?
The biggest concern in the market is Tether's claim that USDT is "almost always" worth $1, with the main concern being the word "almost". In other words, the market is concerned about whether Tether, as the issuer of USDT, has actually reserved enough assets to ensure its safety in pegging to the US dollar.Shortly after the initial release of USDT in 2014, investors' concerns prompted the company to issue certificates for its reserves in 2017, which are currently conducted by an external accounting firm BDOItalia. However, as a company with a history of lying about reserves, the market is particularly concerned about whether Tether's USDT issuance can still make the USDT a stable currency amidst the current turmoil in the currency market. Currently, some investigations by the US authorities into Tether are still ongoing.
Although Tether's report claims to have approximately 82% of the cash and cash equivalent reserves equivalent to the issued USDT, investors are not aware of the exact location of these assets or basic information such as the investment targets of cash equivalents. Due to the fact that USDT should always be valued at $1, cryptocurrency investors tend to view Tether as a bank - but without the deposit insurance provided by ordinary banks to protect customers.If people start to lack confidence in Tether's ability to deliver on promises during times of market pressure, the mechanism of linking the USDT to the US dollar may be eroded and make cryptocurrencies vulnerable to runs. If it encounters trouble and the USDT value exceeds or falls below $1 for too long, it will begin to affect the way people regularly engage in cryptocurrency transactions and affect the company's financial balance.
In 2022, several major companies in the cryptocurrency industry went bankrupt, and investors left the cryptocurrency market one after another - Tether's USDT was the first to bear the brunt, declining from its peak of $83 billion in circulation in April. In May, when the Terra ecosystem collapsed, USDT fell to a low of 95 cents; When FTX faced imminent bankruptcy in November, Tether briefly lost its peg to the US dollar again. Considering the level of anxiety among investors since the FTX crash, any weakening of confidence in USDT could further weaken overall confidence in cryptocurrencies.
For a period of time, stable currency has been a focus of attention for regulatory agencies. They have seen what happens when institutions like banks, but lacking equal protection, encounter trouble.
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