$USDT is tilting, what are the signs?

Specific liquidity pools on the Uniswap and Curve protocols currently appear to be flooded with sellers looking to sell USDT. When sellers flood the market, it can cause prices to decouple quickly.

This was seen during the collapse of Silicon Valley Bank, when the well-received USDC stablecoin lost its peg and fell to $0.93 before recovering to a price of one dollar within a few days.

Analysts at blockworksres pointed out that there are currently two major pools that appear to be vulnerable to significant selling pressure: one is the $380m Curve 3pool, which holds USDT, $USDC, and DAI, and the other is Uniswap v3, which holds USDC and USDT. USDC/USDT pool. Both pools are considered key to DeFi and both have quickly seen significant increases in USDT’s share, which stood at 22% in Curve 3pool three days ago and has exceeded 70% at the time of writing.

In short, USDT holders have been fleeing the stablecoin and actively selling USDT into USDC/DAI. The overall impact has caused Curve 3pool’s USDT net inflow (selling pressure) to reach approximately $120 million. While the current selling activity does not constitute an attack, analysts at Blockworks Research speculate that selling of this magnitude could be considered a precursor to something more significant.

Since the speed and scale of the decoupling (if it occurs) is likely to be accelerated by the lack of liquidity in the pools, especially in the Uniswap v3 pool where most of the liquidity is concentrated at the $1 price, this selling pressure causes special focus on. If the USDT stablecoin decouples, it could have a catastrophic impact on the crypto economy, especially since USDT has already surpassed the heavily regulated USDC stablecoin in market share following the SEC’s aggressive regulatory actions against U.S. crypto companies. .

Over the past three months, USDT’s market capitalization has increased by approximately $14 billion, while the USDC coin’s market capitalization has decreased by almost the same amount. No firm conclusions can be drawn at this time, but unusual levels of selling pressure could reasonably be viewed as concerning.

Tether has always maintained that USDT is backed by holdings of assets of equal value, including cash and bonds, but has never provided a proper audit, only a "certification" of its ability to meet its obligations. Tether’s instability will come at a time when cryptocurrencies face enforcement actions from the U.S. Commodity Futures Trading Commission and other regulators. The CFTC and SEC have both expressed particular interest in stablecoins, and problems with Tether following the decoupling of USDC in March could trigger the kind of systemic circuit breakers that regulators and lawmakers in the crypto industry have feared.

Maybe the unexpected drop in the middle of the night today has something to do with this?