The 1:1 U.S. dollar-backed stablecoin USDT seemed not so stable today as its price once tumbled over 10% merely in hours down to $0.9.

Starting from 13:40 (GMT+8) October 15, the stablecoin has seen abnormal price swings, and its OTC (over-the-counter) prices then began to drop, which soon pushed up the price of mainstream cryptocurrencies particularly bitcoin, as FUD investors either sold it out of panic or traded it into bitcoin.

What happened to the dominant stablecoin? According to market information, the only related news is a notice from crypto exchange Kucoin saying USDT deposits and withdrawals are temporarily closed for USDT wallet maintenance, and the business has been resumed hours later.

However, the panic sentiment has impacted a lot on the market. The mass exodus from USDT led to USDT trading price on several OTC platforms went as low as 6 yuan ($0.86). At the same time, to avoid further losses, investors quickly rushed to trade USDT into BTC, ETH and other mainstream cryptos, which led to the rapid rise of BTC/USDT price from 6530USDT to 7500USDT in merely an hour.

An anonymous OTC trader commented that someone is using the FUD (Fear, Uncertainty and Doubt) sentiment in the market to short USDT. “If you have trust in USDT, buy USDT or trade your BTC into USDT at its lows, when it rebounds, sell it or trade it back. That’s how to make money in the bear.”

The seeds of today’s problem were in effect planted long ago. As the financial situation of its issuing company Tether was not yet made public. It remains unknown whether it has enough reserves to support the value of USDT which is claimed to be backed by 1:1 U.S. dollar reserves. Apart from that, the rollout of auditable and regulated stablecoins – GUSD, PAX and USDC, also pose threat to USDT. All these gradually undermine public trust in it.

As of press time, the price of USDT is recovering, BTC/USDT has dropped back slightly to around 6950USDT, after Zhao Dong, a famed Chinese OTC bitcoin trader, posted chat log with Bitfinex CFO explaining that all is good, only speed slowdown due to high volume of withdrawals.