Major stablecoins are destabilized as market volatility and redemptions increase

Almost all major stablecoins lost their dollar peg amid the FTX saga, but most recovered as markets stabilize.

Falling cryptocurrency prices aren't the only consequence of FTX-induced crypto contagion this week.

The significant market volatility this week induced by the collapse of the FTX exchange has impacted stablecoins, with many of them temporarily detaching.

According to CryptoQuant Senior Analyst Julio Moreno, almost all major stablecoins have seen some level of peg volatility this week.

The world's dominant stablecoin, Tether (USDT) temporarily dipped to $0.97 on Nov. 10 as redemptions topped $600 million in the past two days, he noted.

CoinGecko is currently reporting that USDT is still slightly below its peg, trading at $0.998 at the time of writing.

Cointelegraph reported on the Tether unpecking incident citing evidence that FTX and sister company Alameda Research were attempting to short USDT.

Crypto market volatility has increased significantly in recent days amid the FTT/FTX fall.

How are stablecoins faring in this environment?

Tether's price quickly dropped to $0.97 today, with buybacks exceeding $600 million in the past 2 days. pic.twitter.com/52eAtBs3NP

Circle's USDC has also not been immune to volatility as redemptions topped $1 billion. The stablecoin fell to $0.977 very briefly yesterday, but quickly regained its peg according to CoinGecko.

TrueUSD redemptions barely topped $1 million, Moreno noted, but that didn't stop a breakout at $0.98 yesterday. The Paxos USDP stablecoin fell as low as $0.96 as redemptions hit $100 million, he noted.

There was some volatility f...