Markets look mostly green today. That’s good, right? Especially after a rough few weeks. Except there’s one coin that’s in the red. Tether (USDT). And it’s the most in the red it’s been since, well, ever.

USDT is trading for $.96 accordingly to Coinmarketcap, but it’s starting to see some really scary numbers on some exchanges (some are said to be $.93 at the time of writing).

This isn’t supposed to be happening. Tether is supposed to be pegged to the US Dollar and, since it is as so, able to always move back to a $1 price. That’s the story, and an enormous amount of trading is based on the “security” of how this works. More on that in a second.

When Tether Isn’t $1

If Tether can’t peg itself truly to the U.S. Dollar it has no value and will see investors (or likely “holders” since most have USDT to later buy a crypto asset at a cheaper price) will likely trigger a sell-off. That could be what we’re seeing now and the market is in GREEN because all USDT pairs are being traded away from USDT.

And there are A LOT of pairs trading with USDT. In fact, Tether has become so popular that it’s now the second most traded coin after Bitcoin. Its collapse could send a lot of traders heading in panicked directions.

Tether is supposed to be backed up with enough paper/physical assets, by Bitfinex and others involved, to always stabilize the coin. If that’s not true, we have a big problem that could completely erode trust in investors in crypto asset markets.

Exchanges Suspended Withdrawals

Some panic has been magnified by exchanges cutting off withdrawals of Tether. Kucoin is the biggest one to do so.  That’s a big deal itself, but rumors of Binance potentially delisting it are circulating around, likely causing more damage.

We’ll need to keep monitoring this. If exchanges continue to delist or cut off withdrawals, it is a very bad sign indeed. It would mean massive sell-offs likely from exchanges still open potentially forcing them to suspend actions. It could be the straw that breaks the camels back.

I’m no fan of Tether. I only hold USDT if I’m actively looking at a trade to make (and this has cost me $$ in bad trading technique, but I’ve always feared something like this). I’m wondering now if the uptick in “stablecoins” coming out lately (Gemini, several nations), is because they were foreseeing the Tether issue and need to save the market from total collapse.

And it’s not just that coins are coming. You have the CEO of Binance tweeting about stablecoins and volumes. We have to ask why. We’re likely seeing it now.

From here we may see a day of reckoning for Tether and the markets. And that day might come somewhere down the line, as coin prices propped up off Tether selling suddenly collapse back down. If Tether does crash, we’ll need to see a new coin come in, and fast. Here’s hoping.

Eric is a cryptocurrency writer and editor. He has written on emerging technologies for over seven years and has accrued over 2 million page views. He also runs the paid Coin Agora community. He is currently working on his first novel, which involves a cryptocurrency start-up.