How do stable coins like Tether and USD stay “stable” through the massive ups and downs of the rest of the crypto market?

Question

Why aren’t they subject to supply and demand curves changing their price?

In: 11

Answer 1

They are subject to price and demand. Tether even depegged slightly while USDC went above peg. Massive market makers can buy up the depegged tether for cheaper than $1 and exchange them 1:1 for USD from Tether’s parent company.
Alameda Research is estimated to have made around a billion dollars this week arbitraging the depegged tether to dollars.