As a seasoned crypto investor with a few battle scars and a deep understanding of the volatile nature of this market, I find Deutsche Bank’s report on Tether and stablecoins intriguing but not entirely convincing. While the historical data on currency pegs is interesting, applying it directly to stablecoins may be an oversimplification.
Tether, the leading stablecoin in the market, has strongly contested Deutsche Bank’s latest report raising doubts about the stability of stablecoins and Tether’s financial soundness.
As a crypto investor, I’ve come across numerous reports on stablecoins, but the one published on May 7 really piqued my interest. In this study, researchers analyzed over 330 historical currency pegs dating back to the 1800s and found that a mere 14% had managed to withstand the test of time. With this insight in mind, I can’t help but share the analysts’ concerns regarding stablecoins. They argue that these assets, due to their inherent design, may be more susceptible to turbulence and de-pegging events compared to traditional currency pegs.
The report cautioned that while a few might thrive, the majority are at risk of collapse. This is mainly because of the opaque nature of how stablecoins function and their susceptibility to market swings and investor emotions.
The research focused on the demise of TerraUSD, a stablecoin that lost nearly $45 billion in value from the global cryptocurrency market in May 2022. It underscored the underlying risks and instability of stablecoins and emphasized the importance of increased transparency and regulatory supervision in this area.
As an analyst, I would put it this way: I have raised concerns about Tether’s solvency and its significant influence in the crypto derivatives market. A potential “Tether peso moment,” as referred to in our report, could lead to substantial losses for leveraged traders and have far-reaching consequences for the broader crypto ecosystem.
In their survey of approximately 3,350 consumers from six countries – France, Germany, Spain, Italy, the UK, and the US, conducted in March – the Bank found that a mere 18% are optimistic about the future prosperity of stablecoins. Conversely, 42% anticipate their decline.
Deutsche Bank’s researchers expressed worries over Tether’s significant power due to its perceived monopolistic position in the stablecoin market and its impact on the derivatives sector.
As a crypto investor, I’ve come to expect some level of volatility in the market, even from stablecoins. It’s no shock that around 30% of these digital assets have experienced de-pegging at some point. And unfortunately, there are several defunct stablecoins that have disappeared without a clear explanation.
Tether rejected the findings of the report, pointing out its lack of specific details and solid proof, instead presenting ambiguous claims instead of thorough examination.
The stablecoin supplier argued that the study failed to present sufficient evidence to support its claims predicting a downturn for stablecoins.
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2024-05-10 12:54