At least $700 million has been pulled out of Tether’s stablecoin by investors in an indication of how much the market is being swept up by concerns about the digital empire of Sam Bankman-Fried, founder of cryptocurrency exchange FTX, which is on the verge of bankruptcy.
The token that provides a key link between crypto markets and traditional markets, known as USDT, fell as much as 3.5%, to a low of 96.68 cents, according to data from CryptoCompare. It rebounded to 98 cents in recent trading, but missed the $1 target.
Stablecoins, which are supposed to be linked to real-world currencies, play a central role in the stability of the broader cryptocurrency market by providing a safe haven of cash storage between bets on volatile digital currencies. USDT is the largest stablecoin in the market, with around $69 billion under management.
Tether processed $700 million in cashout requests in one 24-hour period “without a problem,” chief technology officer Paolo Ardoino wrote on Twitter. Typically, when the price of USDT drops below $1, traders will buy it and cash it out for profit, helping to stabilize the price.
The Tether cashout comes amid concerns that the woes of FTX and Alameda Research, Bankman-Fried’s trading firm, could spread to the broader market.
Bitcoin has fallen from around $20,000 a week ago to below $16,500 on Thursday.
