Why is OKEx being so harsh on USDT?

08/11/2023 21:12 • NFT Newsflash • 105 views

OKEx, why is USDT falling so hard? Editor’s note: This article is from ODaily Planet Daily and is authorized to be reposted.

On May 12th, at 8 pm Beijing time, Bitcoin’s USDT debit card was stolen. According to OKLink data from OKEX, USDT on Bitfinex has accumulated a loss of $100 million. According to Coinmarketcap data, as of the time of writing, USDT has fallen to $0.009. This means that users cannot trade with USDT anymore, which poses a serious threat to their assets. In order to ensure the safety of funds, we have decided to exchange USDT for BTC and ETH and provide liquidity to Huobi Global Station at a 1:1 ratio.

So why did USDT suddenly drop so quickly? There are actually three reasons:

The first reason is the volatile market, which has led to many exchanges suspending USDT deposit and withdrawal services. The second reason is the market downturn (such as from 3 am to 4 am), which has caused many users to not use stable wallets. This situation is highly related to the price trend of USDT: when the price reaches a certain range, users receive corresponding USDT as a reward. The third factor is that USDT itself has a certain leverage effect, so once there is a sharp decline, investors can close their positions at any time, thus increasing the demand for USDT. If the market condition of USDT deteriorates, it may affect its value support, leading to market panic and selling pressure.

The second reason is that with the development of the cryptocurrency market and the impact of other financial derivatives on the traditional banking system, some financial companies have had to choose to abandon fiat currency deposit and withdrawal channels and even invest their money in the cryptocurrency field to achieve profitability. However, this also brings another risk. Due to the uncertainty of the crypto world and the opacity of regulatory agencies, it is difficult for people to truly understand the nature of digital gold – Bitcoin. Another point worth noting is that mainstream altcoins on the market currently have situations similar to Bitcoin, such as Ripple, Litecoin, EOS, etc., but these projects have their own characteristics, limitations, and competitiveness. For example, coins like Bitcoin often make small retail investment portfolios insignificant through various methods, while other altcoins like EOS or BCH do not have such strong competitiveness or advantages.

The third issue is whether stablecoins on Ethereum will have significant problems, especially with more and more centralized stablecoins starting to fork, such as Tether, Circle, Coinbase, etc. The total supply of stablecoins they issue is only 21 million, and it continues to grow every day, requiring a large number of verification nodes to participate in maintenance in order to continue circulation. On the other hand, stablecoins based on the Ethereum ERC20 standard are more mature.

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Why is OKEx being so harsh on USDT?

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