The sky is falling in Crypto today because its biggest stable coin has lost its peg to the dollar. Tether USDT, long claimed to be backed up by millions in fiat reserves, is no longer trading at a dollar, currently sitting at $0.966.
A mere three and a half cents off of its normal price might not seem like a big deal to outsiders, but it is. Tether is supposed to be pegged to one USD. Without that stability, it loses its main selling point and could quickly lose the confidence of investors.
While every situation is unique, losing investor confidence has sounded the death knell for previous attempts at a stable coin.
NuBits[1] is hardly talked about these days but it was the crypto world’s first “successful” stable coin. From September 2014 until June 2016 NuBits stayed around one US dollar, give or take a cent. On June 7th it fell to $0.96, which wasn’t that far from its normal variance but was enough to erode investor confidence. June 8th it fell to $0.90 and then by June 9th it had entered free fall, hitting $0.63. by the 18th, it had hit lows of around $0.21.
Somehow, NuBits managed to recover. In September of 2016 it clawed its way back to around the $1 mark. But it was a short lived victory. In late 2017 as rumors of a Bitcoin Christmas crash circulated, investors started jumping back into Stablecoins, including NuBits. Its marketcap jump dramatically and it started seeing short lived spikes in price, up to $1.43. While most coins would welcome an increase in price, for a stable coin it is almost as concerning as a downtick. It is not clear if that is what caused the lack
