"Don't panic, this is Deutsche Bank's opinion. How do you know it's not right."
Immediately after giving a negative view of the stablecoin market, Deutsche Bank research analysts revealed that only 14% of them were able to survive after studying nearly 334 currency pegs.
There is no denying that stablecoins often maintain one-to-one with fiat currencies such as the United States (US) dollar, euro and others that make it easier for investors to trade in cryptocurrencies, but now Deutsche Bank seems to have the opposite view.
This is because the collapse of Terraform Labs which created the stablecoin TerraUSD (TUSD) has resulted in the crypto market experiencing a huge loss of $40 billion in the past two years causing investors to panic.
According to Deutsche Bank analysts further, the continued success of pegged currencies depends on credibility, reserve support and tight operational controls but those qualities are unfortunately lacking in some major stablecoins at the moment.
For example, Tether (USDT) has a lack of transparency following its misleading statement about reserve holdings that has resulted in a $41 million fine from the Commodity Futures Trading Commission (CFTC) plus USDT has been found to be the most used for criminal activity.
The analyst also highlighted potential risks related to USDT's important role in the crypto derivatives market that could exacerbate losses and strengthen leveraged trading, but USDT responded to those concerns by issuing quarterly confirmations of its reserves.
There is no denying that the Deutsche Bank analyst predicted the stablecoin will go down, but USDT thinks the analyst failed to provide concrete data to support his claim and relied only on vague claims.
