Is USDT facing serious selling pressure due to market makers exiting?

Are market makers leaving USDT causing it to sell off?

Under various hints, we can’t help but think, is the serious tilt of Curve 3Pool pool today also related to institutional exits?

Original author: Jaleel, Leo

Editor: Jack

According to data, a total of 99 million USDTs were sold in the 3pool of Curve in the past 24 hours, and the net outflow reached 64.4 million US dollars. In the past 3 days, a total of 205 million USDTs were sold in the 3pool, and the net outflow amount reached 130 million US dollars. At the same time, according to the latest data from Curve officials, as of the time of writing, the proportion of USDT in 3pool has reached 74%, totaling 301,753,409. The proportions of DAI and USDC are 12.91% and 12.74%, respectively.

In the past 48 hours, the concentration of USDT in Curve 3pool has risen to 50%, and it has risen sharply from 50% to 74% in just one hour. This has caused concerns in the community, and everyone seems to be a bit puzzled by the sudden selling pressure of USDT. Could someone have known some key information in advance? After all, the last time the concentration of USDT in Curve 3pool exceeded 50% was at the time of the FTX crash in November 2022. Since then, the concentration of USDT has not reached such a high level.

Are market makers exiting?

Today’s selling pressure of USDT reminds us of the rapid depletion of market liquidity in the past month. Recently, the market has performed poorly and seems to have entered a situation of liquidity shortage. Especially on June 10th, the “15-minute plunge” event, the altcoins fell by more than 20% on average, and mainstream currencies also fell by a corresponding percentage. It is worth noting that the market has not yet been affected by the SEC’s regulatory crackdown at that time. As for the speculation about the reason for the “15-minute plunge”, there are also rumors in the market that Jump Trading and DWF are withdrawing liquidity and delisting.

In fact, this speculation is not groundless. Today, Andrei Grachev, managing partner of DWF Labs, tweeted that the 24-hour spot trading volume in the market has dropped to US$23 billion, the lowest level since the winter of 2019. He revealed that trading platforms have begun to require projects to trade volume and liquidity, otherwise they will be delisted. Retail activities are also relatively low, but for those who want to speculate, make money, or lose money, they still need something to meet their needs. Even currencies with a large market value may experience price fluctuations of 20-30% in 24 hours.

Additionally, Grachev explains that IDOs, IEOs, and direct listings are no longer popular and many are waiting for new things to emerge, including Binance LaunchBlockingd projects, as it always promotes retail activity. If a project is successful, many will try to follow suit. “Projects, trading platforms, liquidity providers, and other market participants are working behind the scenes to fix the market, and while there is no 100% solution, these efforts will definitely bring some benefits to the market. We are currently in a dull market phase, but the future of prices is still uncertain. In the coming months, we hope to see an increase in market activity that will drive prices up, depending on our luck,” said Grachev.

Andrei Grachev’s statement is clearly reflected in the once-shining star of the industry, Sui. The Sui, which previously had a strong IEO launch on OKX, Kucoin, and other trading platforms, has been languishing since its token price surged briefly. Although OKX has supported new Sui projects in the ecosystem multiple times, the price performance of its token SUI is still very weak, and it has been falling all the way. According to insiders who spoke to BlockBeats, many institutions and market makers do not want to provide liquidity for SUI because of the drying up of liquidity and the huge pressure of IEO. A former star public chain seems to be slipping towards the edge of “heavenly projects”.

As the virtual asset most commonly used by market makers, most institutions hold USDT. Under the hint of various information, we cannot help but associate whether the serious tilt of the Curve 3Pool pool today is also related to the institution’s exit?

Will USDT be decoupled?

As USDT’s FUD reappears, some people in the market are eager to short USDT (BlockBeats note: see “Following the institutions, how to do USDT short hedging on the chain?”). Will USDT again experience severe decoupling? Some voices from the community have expressed doubts. A user named Spreek (@spreekaway) on Twitter said that Curve’s fund pool now has very little liquidity and is no longer an important source of liquidity, and the overall market liquidity has decreased, and Curve seems to have lost its pricing power.

It should be noted that in the last Tether uncoupling event, Curve’s fund pool was about 6 times larger than it is now. Some people believe that before redemption, secondary liquidity is usually consumed first because the redemption fee is 10 basis points. This time, the amount of funds required to deplete secondary liquidity is less than last time. By observing the trading volume when the price reaches the redemption price, one can understand the level of concern people have about it. If there are many trades below the redemption price, it means that people are more concerned.

When the liquidity of a stablecoin is too concentrated, it may have a significant impact on the entire Curve platform and its users once the supply or liquidity of the stablecoin is threatened or fluctuates. This may lead to market instability and uncertainty. Excessive concentration may lead to uneven liquidity, with some stablecoins having excess liquidity while others have insufficient liquidity, which may affect the efficiency and cost of trading and have a certain impact on price formation.

“Will USDT have a serious decoupling again?” In response to this question, Tether CTO Blockingolo Ardoino said on Twitter that the market is now turbulent, so attackers can easily take advantage of this common sentiment. “But Tether is always ready, let them come, we are ready to redeem any amount of funds.”

BlockBeats reminds users that as the market develops, the concentration of USDT in the Curve 3pool is still increasing, so please be aware of the related risks. At the same time, BlockBeats will continue to pay attention to changes in the Curve ecosystem to understand the dynamics and impact. Please pay attention to BlockBeats’ ongoing coverage.