Ever since the issues regarding the FTX exchange & Alameda have surfaced, a ripple of negative impacts has worsened the crypto markets. Bitcoin and all the popular altcoins marked new yearly lows, causing extreme fear within the space. However, the spotlight was when the top stablecoin Tether(USDT) depeg with a huge bearish wave prevailing within the market.
Meanwhile, the market participants were switching to panic mode, but a sudden recovery calm all the other actions. A similar reaction was recorded soon after Terra (LUNA) underwent a monstrous drop. The USDT also depeg to $0.09989. Soon the circulating supply was slashed by 3 billion which enabled the stablecoin to repeg to $1.
However, a similar drop is witnessed at the moment but appears to be more intensified than before.
As mentioned in the above chart, the USDT had slumped hard to reach below $0.95. Further, a huge amount of USDT was bought & a reduction in supply uplifted the price remarkably. However, in the present case, the bears have capitulated on the market and the selling volume has intensified. As both events are relatable, the speculation of Alameda Research shorting USDT is revolving around space.
The analyst here lists the current events occurring within the crypto markets. The USDT shorting, is reportedly carried out by Alameda by supplying USDC on AAVE and borrowing USDT. Further, the platform swaps USDT to USDC on the curve, and the transaction has been recorded on Etherscan.
If the speculation turns out to be true, then the Tether reserves need to burn more USDT from their treasury than they did before. Meanwhile, the USSDT may repeg to $1 within a few days, but the border market conditions still remain extremely bearish.