Cryptocurrency investors and traders have cashed out $7.7 billion from the stablecoin Tether (USDT), resulting in its market capitalization falling by 7.8% over the past seven days to $76 billion.
The amount withdrawn from the top stablecoin is nearly double the $4.1 billion it held in cash reserves at the end of 2021, according to Tether’s latest reserves report from December 2021.
To maintain Tether’s peg with the United States dollar, the company behind the token backs USDT with assets such as cash, bonds and Treasury bills, the purpose being that each token is backed by at least $1 worth of assets.
According to the latest reserves report, the company had a total assets amount of at least $78.6 billion, around $4 billion or 5% of which was cash.
However, the firm seems to be able to maintain its cash reserves despite the “bank run” scenario caused by the collapse of the algorithmic stablecoin TerraUSD (UST), which had investors fleeing not only stablecoins but the entire crypto market for fear of collapse.
A separate transparency report updated daily shows that 6.36% of Tether’s assets are currently held in cash which would amount to roughly $4.8 billion if Tether’s reserves closely match the USDT market cap.
On Thursday, market panic caused USDT/USD to trade under $0.99 on major exchanges, causing Tether to issue a statement at the time stating that it will honor all redemptions to $1.
The same day, Tether’s chief technology officer Paolo Ardoino said in a Twitter spaces chat that the majority of the company’s reserves are in U.S. Treasuries and that over the last six months it has reduced its exposure to commercial paper.
Related: Untethered: Here’s everything you need to know about TerraUSD, Tether, and other stablecoins
Tether has received scrutiny for its secrecy regarding the assets in its reserve and only published its first reserve breakdown in May 2021. The published reports are still vague as to the exact assets the company invests in.
This obscurity, coupled with the recent short-lived de-pegging, had some investors rushing to swap their Tether for another popular U.S. dollar stablecoin, USD Coin (USDC), on the notion that USDC was audited and already fully backed by cash and U.S. Treasuries.
A blog post on Friday by Circle’s chief financial officer Jeremy Fox-Geen made in response to the stablecoin fallout reaffirmed that USD Coin was fully backed by cash and U.S. Treasuries for the 50.6 billion USDC in circulation.
Data from CoinGecko further shows investors finding a safe harbor in USDC. A 6.3% leap in the USDC market cap took place between May 3 and Tuesday, representing $3.1 billion of inflows over that time.