Hedge funds and large traders are shorting the USDT stablecoin en masse. This is due to the decline in the cryptocurrency market, the collapse of the Terra project and the tightening of the policy of the US Federal Reserve.
Traditional hedge funds are shorting USDT for hundreds of millions of dollars, according to The Wall Street Journal (WSJ). Leon Marshall, Head of Institutional Investor Relations at Genesis Global Trading, called the situation a “surge” among hedge funds looking to sell USDT. Some investors have been selling it for at least a year, but after the collapse of the algorithmic stablecoin UST, more and more hedge funds are betting against USDT.
TerraUSD was pegged to the US dollar at a ratio of 1:1 and was considered one of the largest stablecoins. However, after the loss of the dollar peg, the rate of UST and LUNA fell to almost zero, despite the best efforts of the Terra team to save the project. This fiasco has shaken the entire cryptocurrency space, with a particularly negative impact on the stablecoin market. The consequences could not be avoided and USDT, which is now holding at $0.99.
Marshall believes that the massive sale of USDT is due to disagreements related to the provision of Tether assets, as well as the decision of the US Federal Reserve System (FRS) to raise interest rates to fight inflation.
This month, Tether said that 47% of total USDT holdings are US Treasury bonds and the company will continue to reduce the stablecoin’s support for securities. Tether CTO Paolo Ardoino also commented on the current situation on Twitter. In his opinion, hedge funds short USDT will end up buying back the stablecoin anyway. USDT is the only stablecoin “fire-baptized” under extreme pressure, Ardoino said.
“I have spoken openly about the attempts by some hedge funds to cause further panic in the market after the collapse of Terra. From the very beginning, it seemed like a coordinated attack, a new wave of FUD, an attack by armies of trolls and clowns,” Ardoino wrote.
Recall that in May, Tether launched a stablecoin pegged to the Mexican peso and operating on the Ethereum, Tron, and Polygon blockchains. In addition, the company is gearing up for the launch of the pound sterling-backed stablecoin GBPT.
Source: Bits
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