Whales have been selling off large amounts of Tether (USDT), the largest stablecoin in the crypto market, causing a spike in its share within the Curve 3pool liquidity pool. The unusual influx of USDT has raised concerns about the stablecoin’s stability and sparked speculation about USDT’s depegging.
Curve’s 3pool is a stablecoin pool for decentralized finance that holds a significant amount of liquidity of the three top stablecoins in DeFi: USDT, USDC, and DAI.
The pool’s ideal balance for each stablecoin should be 33.33%; however, USDT’s balance has risen to over 70%, indicating heavy selling pressure on the token.
A crypto analyst, Miles Deutscher, tweeted that whales have been dumping USDT, resulting in USDT accounting for more than 50% of the Curve 3pool. He said this is the highest since November 2022, when FTX collapsed.
He also wondered if this sudden surge in USDT inflows was due to FUD or insider knowledge.
The recent dumping of USDT by whales has also affected its price, which deviated slightly from its June 15 dollar peg value. As the USDC/USDT trading pair on Binance achieved a new yearly high of $1.0034, USDT dipped by 0.3% to about $0.997.
History of USDT depegging
USDT depegging is not a new phenomenon, as the stablecoin has faced several episodes of instability. One of the most notable ones was in May 2022, when USDT fell by 4.8% to $0.9508, its lowest level since the 2017 crypto crash.
This was triggered by the Terra crash, which caused a massive liquidation of LUNA and UST tokens.
Another depegging event occurred on June 6, 2022, when USDT traded at $0.18 per USDC on ValleySwap, a decentralized exchange on Avalanche. This was attributed to a glitch or an exploit on the platform, which was quickly resolved.
Tether, the company behind USDT, has repeatedly assured its users that its stablecoin is fully backed and redeemable at any time.
Some crypto enthusiasts, however, have questioned Tether’s claims of transparency and solvency, pointing out that the company has not provided a full audit of its reserves and has faced legal troubles with regulators.
Whale shorts on USDT
Lookonchain, a blockchain explorer, has identified specific addresses associated with the pump and dump activities surrounding USDT. One notable player is CZSamSun, who reportedly shorted USDT on Aave V2 after its depegging.
CZSamSun borrowed a large amount of USDT from Aave V2, specifically 31,544,278 USDT, and exchanged it for 31,475,408 USDC at $0.9978.
He then redeposited 10 million USDC back onto Aave V2, suggesting a calculated strategy to exploit the depegging situation.
The recent dumping of USDT by whales and the consequent impact on the Curve 3pool has once again raised concerns about Tether’s stability and integrity.
USDT is trading at $0.9973, experiencing a slight 0.25% decrease in value over the past 24 hours. With an approximately $83 billion market capitalization, USDT remains one of the crypto market’s largest and most widely used stablecoins.
