Ongoing aversion to Tether (USDT), the largest stablecoin, appears to have spread into its largest wallets, new data shows.
Data from blockchain analytics firm Santiment shows that addresses holding between $100,000 to $10 million USDT are close to three-year lows in terms of supply held.
The trend comes amid a growing number of traders dumping USDT in favor of other stablecoins, such as USDC and DAI. This has also resulted in the DeFi platform Curve having a serious USDT imbalance in its liquidity pool, as more traders swapped the coin for other tokens.
About 63% of Curve’s 3pool consists of USDT- roughly $630 million.
What does dwindling whale interest mean for USDT?
A drop in the number of major accounts holding USDT indicates that some traders may be losing faith in the token. Repeated dumping of the stablecoin could pressure Tether’s redemption mechanism, and possibly de-peg the token.
USDT has traded at a marginal discount to its $1 peg for nearly two months since the Terra crash. A widening in this discount may represent an opportunity to but USDT at a discount, on the prospect of a full recovery.
Tether has so far steadily honoured redemptions of the token- worth about $20 billion in the past two months. It is also confident that its reserves will be able to take any more selling pressure.
Uncertainty over Tether’s reserves
A bulk of selling pressure on USDT this year comes from uncertainty over the nature of its reserves. While Tether claims that its reserves have been audited by a Cayman Islands-based entity, some investors have called for a more comprehensive breakdown of its holdings.
Data from Tether shows that 85% of its reserves consist of cash and commercial paper, including U.S. Treasuries. But investors have sought clarity on what non-U.S. commercial paper the firm is holding.
As of Tether’s last audit, the firm holds roughly $20 billion worth of commercial paper, a bulk of which is rated as investment grade. But it is unclear who the issuers are.
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