Tether loses peg, drops below $0.95

Price chart of Tether to USD, showing a gradual decline below $0.99, then a dramatic dip to $0.95, before recovering to around $0.98 and then a more gradual recoveryTether/USD on May 11–12 (attribution)
Tether, the largest stablecoin, had a major wobble. Pegged to the U.S. dollar and widely used throughout the cryptocurrency ecosystem, even a fractional cent deviation from its peg can have enormous ramifications. Tether spent six hours below $0.99—at one point slipping down to $0.95—in the most significant deviation from its peg in recent history. The dip was widely connected to the recent and even more dramatic de-peg of the previously third-largest stablecoin, TerraUSD, as well as the general crypto market crash.

Tether began to recover somewhat as the day progressed, gradually returning to above $0.99. However, the de-peg has clearly shaken the cryptocurrency ecosystem. The heavy reliance on Tether means that a substantial or protracted loss of its peg would be devastating, and the open secret that Tether does not have the backing assets it once claimed has intensified fears about a possible run on Tether.