Discover the recent USDT sales surge on Curve and UniSwap, contrasting with Bitfinex’s unwavering $1 valuation and its implications for market dynamics.
Yesterday, there were widespread USDT sales on the main stablecoin liquidity pools on the DEXs Curve and UniSwap. Overall, the market price of USDT on the exchanges stayed at $1, and on its main exchange, Bitfinex, it never dropped below $1 for even a brief period of time. On the DEXs Curve and UniSwap, however, it is a different story.
Since DEXs do not support fiat currencies, it is impossible to compare the market price of USDT stated in US dollars.
However, the USDC and USDT stablecoin trading pair on Curve shows that the values have been departing from parity with the dollar for days, albeit in opposite ways.
As an illustration, there was a lot of volatility on July 31st, usually above $0.99, and yesterday, after a little decline on August 2nd.
The USDT price dropped as low as 99.76 cents and spent the majority of the day trading just above $1. This pattern appears to be persisting right now.
The pools are out of balance due to the aggressive selling of USDT on Curve. Since the tokens are typically in balance, these pools are really frequently utilized on DEXs to transact stablecoin quickly. Instead, the sales from yesterday showed imbalances, which suggested that DAI or USDC were preferred over USDT.
It’s critical to remember that Curve Finance was hacked a few days ago.
In fact, the CRV token’s price for Curve DAO abruptly decreased from $0.7 to $0.6 on July 30 and then again to $0.5 on August 1. Later, it made a small comeback to $0.57.
The stablecoin’s volatility on Curve began on July 28 and reached its peak on July 31.
Therefore, the situation is not at all steady.
USDT: Uniswap and the Curve comparison
Uniswap, on the other hand, had no technical issues.
However, the USDC/USDT trading pair’s volatility has been increasing recently.
Actually, everything was well up until July 30; it wasn’t until July 31, the day following the Curve hack, that things started to change.
Despite the fact that the price of USDT has never dipped below $0.99, the high was between Wednesday and yesterday.
This pattern makes it evident that there was no Tether dollar depeg; rather, volatility within DEXs was to blame, maybe as a result of some traders’ partial switch to other stablecoins, namely USDC and DAI.
DAI and USDC
One can see that both USDC and DAI are declining when examining the changes in the market capitalizations of the major stablecoins over the previous week.
DAI nonetheless decreased from $4.54 billion to $4.6 billion, despite having surpassed BUSD (Binance USD) to become the third stablecoin with the greatest market capitalization, behind USDT and USDC.
However, it had increased to $4.58 billion on July 30, the day of the Curve breach, and to about $4.6 billion the next day. However, it started to decline on August 2 and even fell back to levels from July 29.
It is important to keep in mind that because DAI is an algorithmic stablecoin, its market capitalisation is always fluctuating.
The market value of USDC has decreased recently as well.
It decreased from 26.5 billion on July 29 to the present level of 26 billion, but it did not rise throughout the time of the Curve hack.
According to this information, the global crypto markets are not shifting in favor of USDC or DAI.
The Tether dollar (USDT) controversy, on the other hand, is a different story.
Tether just revealed its second quarter results, which, in part because of the extremely high interest rates in the US, turned out to be the best in its history.
In actuality, USDT’s capitalisation increased between July 29 and July 30 from 83.8 to about $83.9 billion, only to drop back to 83.8 billion in the days following the Curve breach.
It had risen once more by August 1 to 83.9 billion before dropping down to 83.8 billion yesterday.
These data make it clear that the acts taken were minor and of little significance.
Despite the Curve hack and the enormous DEX sales having an influence, this was really modest and nearly inconsequential.
What becomes clear is that the behavior mentioned earlier is entirely internal to DEXs, and in particular to Curve and Uniswap. This is further supported by the fact that it never lost its peg with the dollar, especially in the primary market.
There is a new rival for stablecoins pegged to the US dollar.
It very recently gave birth and is known as First Digital USD (FDUSD).
The fact that Binance, the biggest cryptocurrency exchange in the world, is supporting this stablecoin is intriguing.
The CTO of Tether, Paolo Ardoino, asserts that the recent fluctuations in stablecoins may actually be caused by the entry of this competitor, supported by Binance, into the market.
It is important to note that FDUSD now only has $260 million in capitalization, placing it in only the 12th position globally among the most heavily capitalized stablecoins. For instance, BUSD, which has been conveniently removed from the markets for months, nonetheless has close to $3.5 billion in capital.