In a fresh wave of market turbulence, Tether (USDT) — the world’s largest stablecoin by market capitalization — has once again come under pressure as major holders, commonly referred to as "whales," offload significant amounts of the token. This surge in selling activity has led to a dramatic shift in the composition of the Curve 3pool, one of the most important decentralized liquidity pools in the Ethereum ecosystem. The sudden imbalance has reignited concerns about USDT’s long-term stability and its ability to maintain its crucial 1:1 peg to the U.S. dollar.
What’s Happening in the Curve 3pool?
The Curve 3pool is a key liquidity hub that facilitates seamless trading between three major dollar-pegged stablecoins: USDT, USDC, and DAI. Under normal conditions, these assets are expected to maintain a relatively balanced distribution within the pool. However, recent on-chain data reveals a sharp deviation from this norm.
According to analyst Miles Deutscher, who shared his findings on social media, USDT now accounts for over 73.17% of the total liquidity in the Curve 3pool — a level not seen since the aftermath of the FTX collapse in November 2022. This means that more than two-thirds of the pool is now dominated by Tether, while USDC and DAI have been significantly diluted.
“Whales have been dumping $USDT, resulting in USDT now comprising 50%+ of the Curve 3pool,” Deutscher noted, highlighting the growing unease in the crypto community.
This disproportionate influx suggests that large investors are either losing confidence in USDT or are strategically positioning themselves ahead of a potential depegging event. Whether driven by fear, uncertainty, and doubt (FUD) or by insider knowledge remains unclear — but the implications are undeniable.
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Historical Context: Past Depegs and Market Reactions
Tether has faced scrutiny before. The most notable incident occurred during the Terra (UST) collapse in May 2022, when USDT briefly lost its dollar peg, dropping to $0.9508 — its weakest level since the 2017 crypto downturn. At the time, widespread panic triggered massive redemptions and liquidity withdrawals across decentralized finance (DeFi) platforms.
Another concerning episode unfolded on June 6, 2022, when USDT traded at just $0.18 against USDC on ValleySwap — an extreme deviation likely caused by low liquidity and panic selling on a smaller exchange. While the broader market quickly corrected the anomaly, it exposed vulnerabilities in how stablecoins behave under stress.
These past events continue to shape investor sentiment today. With USDT currently trading at $0.9973 — down 0.25% over the past 24 hours — even minor fluctuations are being closely watched for signs of deeper instability.
Whale Activity: Who’s Betting Against USDT?
On-chain analytics platform Lookonchain has identified specific wallet addresses actively participating in what appears to be a coordinated shorting strategy against USDT.
One such address, linked to an entity known as CZSamSun, borrowed 31.5 million USDT from Aave V2 following early signs of depegging. The whale then swapped the borrowed Tether for 31.47 million USDC at an exchange rate of $0.9978, effectively locking in a profit if USDT continues to decline. Additionally, CZSamSun deposited 10 million USDC back into Aave as collateral, indicating a leveraged position designed to capitalize on further depreciation.
This type of maneuver is not uncommon during periods of market stress but underscores growing skepticism among sophisticated players. When whales begin hedging against a supposedly “stable” asset, it sends shockwaves through both DeFi and centralized markets.
Why Does This Matter for Crypto Investors?
Stablecoins like USDT serve as the backbone of digital asset trading and lending. Over $83 billion worth of USDT is currently in circulation, making it essential for price discovery, arbitrage, and liquidity provision across exchanges and protocols.
A sustained depegging could trigger:
- Mass redemptions and bank run-like scenarios
- Liquidity crunches in DeFi lending markets
- Forced liquidations in leveraged trading positions
- Erosion of trust in algorithmic and collateralized stablecoins
Moreover, because many traders use USDT as a safe haven during volatility, any loss of confidence could accelerate sell-offs across other cryptocurrencies, including Bitcoin and Ethereum.
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Frequently Asked Questions (FAQ)
Why is USDT depegging happening again?
USDT depegging typically occurs due to sudden shifts in supply and demand dynamics, often triggered by macroeconomic fears, regulatory rumors, or large-scale redemptions. In this case, heavy whale selling and imbalanced liquidity in the Curve 3pool are primary contributors.
Is my USDT still safe?
As of now, Tether Ltd., the company behind USDT, maintains sufficient reserves to back outstanding tokens. However, transparency concerns persist. While audits have improved over time, full real-time attestation remains limited. Holding small-to-moderate amounts for trading purposes is generally considered low-risk.
How does Curve 3pool imbalance affect me?
If you’re providing liquidity or borrowing against stablecoins in DeFi protocols tied to Curve, an imbalanced pool increases impermanent loss risk and reduces capital efficiency. It may also delay withdrawals or trigger rebalancing fees.
Can USDT go below $0.90 like UST did?
While theoretically possible under extreme panic or reserve insolvency, it’s highly unlikely given Tether’s diversified reserves (including cash, bonds, and commercial paper) and its much larger adoption base compared to UST. Still, no stablecoin is immune to systemic shocks.
What should I do if USDT loses its peg?
Monitor official channels and exchanges for redemption options. Consider converting to more transparent stablecoins like USDC during prolonged depegging. Avoid panic-selling unless absolutely necessary.
Are other stablecoins affected?
Yes. When USDT wobbles, traders often flock to alternatives like USDC or DAI, increasing demand and occasionally pushing them slightly above $1. However, a systemic crisis could strain all fiat-backed stablecoins depending on their reserve quality.
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As the crypto ecosystem evolves, so too must investor vigilance. While Tether remains a dominant force in digital finance, repeated stress tests highlight the need for diversification and real-time monitoring tools.
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The current situation serves as a reminder: even "stable" assets can become sources of systemic risk when trust erodes. Whether this latest depegging fades into history or escalates into a broader crisis will depend on how quickly confidence is restored — and whether whales decide to buy back in.