USDT faces severe selling pressure. Are market makers withdrawing?

According to the data, in the past 24 hours, a total of 99 million USDT were sold in Curve 's 3pool, with a net outflow of $64.4 million. In the past 3 days, a total of 205 million USDT were sold in 3pool, with a net outflow of $130 million. At the same time, according to the latest official data from Curve, as of the time of writing, the proportion of USDT in 3pool has reached 74%, totaling 301,753,409. DAI and USDC account for 12.91% and 12.74% respectively.

In the past 48 hours, the concentration of USDT in Curve 3pool has risen to 50%, and then rose sharply from 50% to 74% in just one hour. This has caused concern in the community, and everyone seems to be a little confused about the sudden selling pressure of USDT. Could it be that someone knew some key information in advance? After all, the last time the concentration of USDT in Curve 3pool exceeded 50% was when FTX collapsed in November 2022, and the concentration of USDT has never reached such a high level since then.

Are market makers exiting?

Today's selling pressure on 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 the "15-minute crash" on June 10, the altcoins generally fell by more than 20%, and the mainstream currencies also fell by a corresponding amount. It is worth noting that the market had not yet been affected by the SEC's regulatory attack. As for the speculation about the cause of the "15-minute crash", there were also rumors in the market that Jump Trading and DWF were withdrawing liquidity and delisting.

In fact, this speculation is not groundless. Today, Andrei Grachev, managing partner of DWF Labs, tweeted that the current 24-hour spot trading volume in the market has dropped to US$23 billion, the lowest since the winter of 2019. He revealed that trading platforms have begun to require projects to have a certain amount of trading volume and liquidity, otherwise they will be delisted. Retail activity is 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 larger market capitalizations may experience price fluctuations of 20-30% within 24 hours.

Furthermore, Grachev explained that IDOs, IEOs, and direct listings have all fallen out of favor, and many are waiting for something new to emerge, including the Binance Launchpad project, as it always boosts retail activity. If a project is successful, many will try to emulate it. “Projects, exchanges, market makers, and other market participants are working hard 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 at a low point in market activity, but the future of prices remains uncertain. In a few months, we are expected to see an increase in market activity and drive prices higher, depending on how lucky we are.”

Andrei Grachev's statement is clearly reflected in Sui, the rising star of Move that once shone in the industry. Sui, which was previously strongly launched on IEOs on trading platforms such as OKX and Kucoin, has been sluggish in token price after a short-term surge. Although OKX has repeatedly supported new projects in the Sui ecosystem, the price performance of its token SUI is still very sluggish, falling all the way. According to an insider from an institution who revealed to BlockBeats, due to the depletion of liquidity and the huge selling pressure of IEO, many institutions and market makers are unwilling to provide liquidity for SUI. A once-star public chain seems to be sliding towards the edge of a "dead project".

As the most commonly used virtual asset by market makers, most institutions hold USDT. Under the hint of various information, we can't help but wonder whether the serious tilt of Curve 3Pool today is also related to the withdrawal of institutions?

Will USDT decouple?

As the FUD of USDT reappears, some people in the market are eager to try and short USDT. Will USDT experience a serious decoupling again?

Some voices from the community have questioned this. A Twitter user named Spreek (@spreekaway) said that Curve's funding pool now has very little liquidity and is no longer an important source of liquidity. The overall market liquidity has declined, and Curve seems to have lost its pricing power.

Spreek noted that it is worth noting that during the last Tether decoupling event, Curve's pool was about 6 times larger than it is now. It is also believed that secondary liquidity is usually consumed first before redemption, which is because the redemption fee is 10 basis points. This time, the capital outflow required to exhaust secondary liquidity is less than last time. By observing the trading volume when the price reaches the redemption price, you can understand how much people are paying attention to it. If there is a lot of trading volume below the redemption price, it means that people are paying more attention.

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

"Will USDT experience another serious decoupling?" In response to this question, Tether CTO Paolo Ardoino tweeted that the market is turbulent now, so it is easy for attackers to take advantage of this general sentiment, "but Tether is ready as always, let them come, we are ready to redeem any amount of funds."