The UST-Luna fiasco reaffirmed a key facet of the crypto industry; a nascent rising sector with multiple projects will tend to co-exist with a few bad apples. The UST ‘stablecoin’ is priced at $0.12 at press time. UST continued to face flak, and for a brief period, another stablecoin faced scrutiny. Tether USDT, the largest stablecoin dropped its peg to $0.94 momentarily, causing further chaos in the market. At press time, it is back to $0.99, and the drop was considered another form of ‘panic sell’ or ‘market pressure’.
Well, that might not have been the case, and in this article, we will try to unravel a little situation that remains in the shadow, and yet demonstrated in front of everyone.
Tether USDT is doing a victory parade but for what?
As UST crumbled in front of the entire ecosystem, USDT’s hiccup in the market led to everyone holding their breath. For a certain moment, everyone assumed that the ‘panic selling’ was going to bend every stablecoin. The fear was profound, as illustrated by our ‘shitcoinfan’.
So, over the past 12-hours, as Tether re-established its peg, it was recognized as an accomplishment for Paolo Ardoino and Tether. As if, they had started crypto death in the eyes and came out victorious.
Now, little do the masses know, that there are moving parts to such stablecoin drama, which is purely and possibly orchestrated. To find out and attain more clarity, let us analyze Tether’s movement concerning other stablecoins over the past 24-hours.
USDT-BUSD-MMM?
No! MMM is not the ticker name for another asset but simply the ‘non-popular’ acronym for market maker manipulation. Glad you asked. Now the common consensus during Tether’s collapse was that traders were moving their allocations from USDT to BUSD, and USDC. Technically correct, but it wasn’t because there was panic, it was an intended move. To explain MMM, the timing of these moves and their correlation is vital.
As illustrated in the chart above, Tether was dumped at the same time as BUSD’s price was inflated. The objective here remains to cover the spread on a stablecoin dump and pump on the same exchange within a small trading window. Arbitrage is a familiar term used to describe such a scenario, but here it happens on the same platform. So basically, manipulators are first pushing the price of BUSD with their withdrawals from USDT.
At exactly $1.10 (sell orders triggered), they pull 10% profit and systematically buy USDT at $0.951. BUSD begins to drop, and at the same time, USDT rises back to $0.99, attaining another 5% profit during the move. A 15% profit spread is covered during the entire shenanigan and in a bear market. Now it might seem like a pure coincidence, but such a setup has been identified in the past as well.
On December 4th, 2021, Bitcoin suffered a flash crash where its price dropped from $53,400 to $42,000. A window of opportunity opened again for these MMMs and a plan was in motion. Same the same hourly window, Tether USDT was pushed up this time to $1.09, whereas USDC was pushed down to $0.2 on Binance. A massive spread of 90% profit was accumulated collectively, and the market resume normal activity.
But Why during a Bearish Market?
These instances have taken place quite a few times as observed in the chart below. Between April 2021 and May 2021, the market registered massive corrections, and MMMs were having a field day across different stablecoins.
Now choosing bearish periods for such inhibitions, is to target the mindset of the collective ecosystem. Creating such chaos during a consolidating or rising market brings eyes to their act, whereas during a bloodbath, the panic is evenly distributed. Traders are worried about their Bitcoins and Altcoins, who is even keeping an eye on stable assets?
The wise ones know
Yes, MM’s act of manipulation was not discovered by us and it has been identified by other analysts and traders in the past. Yet, none of the data above confirms or denies MMM’s true nature. These are factual speculations and the objective remains to make the investor class aware of such narratives, not believe them. As a word to wise goes again and again in the crypto space, Do Your Own Research.
Disclaimer: The argument attested in the is strictly speculative and not be taken as a confirmation of the event.