During high volatility events, stablecoins sometimes break their currency’s peg to the dollar. If there is some wild nonsense about Bitcoin being banned, hacked, or dying, stablecoin prices occasionally surge above $1.00 as traders seek shelter in the dollar-fixed asset.
During the events of the cryptic Black Swan, sometimes Tether
lose its peg to the dollar. This has happened many times in the past, and usually, once the smoke clears, the 1:1 wedge recovers.
On November 9, the USDT/USD pair broke below its currency peg to the dollar, dropping to $0.97 at one point, according to data from TradingView and Coinbase. While USDT fell below the peg of the US dollar currencies
The value rose to $1.01.
USDT/USD peg. Source: TradingView
While we won’t be exploring the unconfirmed reasons why there was a rift between them, the unsubstantiated rumors regarding Tether and Alameda’s research can easily be found on Twitter.
It is important to note here that panic can easily be triggered by misinformation, rumors, and lies, so it does not matter if the rumors about Alameda/Tether are completely false.
If it goes viral on social media and scares off investors, they will act and in this case; Many will or are in the process of flipping USDT to USDC, BTC or other stablecoins.
Similar behavior was seen during the collapse of Terra and C. On May 12, USDC price increased from $1.00 to $1.06 to $1.19, according to data from TradingView and KuCoin. On the same day, USDT dropped briefly to $0.98 and $0.94.
USDC/USD peg. Source: TradingView
When the price is fragmented and there are spreads across exchanges, it becomes costly to make stablecoin transfers and the experience of switching from one currency to another or from an altcoin to a stablecoin can become unpleasant.
Pegging USDT and USDC to the dollar is something worth paying attention to.
Bitcoin price forecast
The November 8 sell-off finally pushed the BTC price out of a 146-day range where the price fluctuated between $24,500 and $18,600.
BTC/USDT 1-day chart. Source: TradingView
This is a huge range break, and from a technical analysis point of view, failure to reclaim this range and further selling could see the price slice through the volume profile gap to find support in the $11,000-$12,000 range.
Unpleasant, yes, but this is the current reality.
If Bitcoin can reclaim and hold the $18,000 handle, the price will at least return to its previous range, which would be a good sign.
A glimpse of the ether
The chart reflects a similar setup where ETH fell from a 148-day range between $2,000 and $1,250, but the price has already regained the previous range.
ETH/USDT 1-day chart. Source: TradingView
Bearish traders have a downside target in the $700 range, but it will be interesting to see how the price rebounds to trade again around $1250.
Related: Genesis Trading reveals $175 million in funds locked in FTX
The market is looking for firmer foundations
A lot of crypto-focused companies and investment groups are being exposed to FTX and Alameda research, which also means that those same companies now have some holes in their balance sheets.
A handful of these crypto-natives also have sizable bags of various altcoins and Decentralized Finance (DeFi) tokens. To salvage current losses, offset their own loans, and fulfill their client obligations, it is possible that a number of BTC, altcoin, and DeFi caches will find their way to be sold in the market on spot exchanges.
Altcoins have already fallen badly, and some of them are relatively illiquid, which means that a sharp increase in selling could put strong downward pressure on the price.
Before buying what looks like once-in-a-lifetime dips and cycle bottoms, investors should research and take a hard look at who are some of the majority holders in the token/project and remember that the multi-billion dollar FTX implosion is not being fully felt at all. across the sector.
Now is the time to research and do your due diligence before making any investment in any cryptocurrency.
This newsletter was written by Big Smokey, author of The Humble Pontificator Substack and Cointelegraph’s resident newsletter author. Every Friday, Big Smokey will write market insights, drive to how-to, analysis and early bird research on potential emerging trends in the cryptocurrency market.