USDT loses parity with the dollar and reached 95 cents Terra USD effect?

Key facts:

The stablecoin was worth $0.95 for a couple of hours and still does not reach its ideal value.
The developer company did not provide explanations about what happened yet.

In the early hours of today, Thursday, May 12, 2022, the stable cryptocurrency or stablecoin tether (USDT) lost its peg with the US dollar. It came to trade at USD 0.95 and at the time of writing this article it had risen to USD 0.98.

According to data from CoinMarketCap, the disparity of USDT with its underlying asset was en a two-hour period in the early morning of May 12. This peg is essential for the stablecoin, so named precisely because its primary objective is to prevent traders from being exposed to the volatility of other cryptoassets such as bitcoin (BTC) and ether (ETH).

This is what the movement of USDT looks like on the daily chart of the cryptocurrency’s value. Source: CoinMarketCap

At the time of publication of this article, the developer of the stablecoin, Tether, has not given explanations about this movement in the price of the cryptoactive.

On his Twitter account, it is only observed notice about issues and chain changes that have already been seen in the past and that usually do not have effects on the value of the token. A few minutes ago, in addition, the Tether account was published explanatory videos about the differences between the various types of stablecoins.

Tether published a technical notice during the early morning of Latin America, but its price was not affected by this in the past. Source: Twitter @Tether_to

The reaction of the USDC stablecoin

While USDT is trying to recover and reach the value of USD 1 again, the stablecoin developed by Circle USD coin (USDC) it had a slight upward movement. Its price remains unchanged at one dollar, but in the graph below you can see how it rose by a fraction of a cent to USD 1,008, in a movement that had not occurred in the last 12 months.

Unlike USDT, USD coin had a minimal increase in its value. Source: CoinMarketCap

All this is given in a context of FUD (fear, uncertainty and doubt) regarding stablecoins and the funds that support their issuance. The case of terra USD (UST), the stablecoin that lost almost 80% of its market value in three days this week as reported by Criptonews, ignited the debate about these cryptocurrencies and their true security for users.

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