Tether, the popular stablecoin pegged to the US dollar, has solidified its position as a dominant force in the crypto market with a remarkable $5.25 billion increase in market capitalization. This growth surpasses the approximately $4 billion brought in by spot Bitcoin ETF products, raising questions about Tether’s potential impact on Bitcoin and the overall market.
In a recent YouTube video by Crypto News Flash, it was revealed that Tether (USDT) has exceeded $100 billion in market valuation and circulation, making it the first stablecoin to achieve this milestone. This achievement was driven by the increased demand for Bitcoin, which was trading at over $64,000.
According to the latest data from MarketCap, USDT’s market capitalization has now soared to over $104 billion. This marks a significant shift from the start of the month when it stood at approximately $98.65 billion. Although this growth was hidden by a brief consolidation period, it is important to note that the $5.25 billion added to USDT’s market capitalization greatly enhances overall market liquidity. This provides a solid foundation to meet the demands of Bitcoin and other altcoins.
In comparison, the combined spot Bitcoin Exchange Traded Fund (ETF) market has only seen a net inflow of less than $4 billion this month. The fact that USDT’s liquidity surpasses the rise of the ETF’s Asset Under Management (AUM) means that there is ample stablecoin to support the accumulation of both Bitcoin and other cryptocurrencies on exchanges.
It is worth mentioning that Bitcoin, as a market leader, tends to react strongly to large inflows or outflows of capital. When a significant amount of capital enters the market, Bitcoin often experiences an upward momentum in price due to increased demand. Therefore, Tether’s $5.25 billion investment could potentially fuel Bitcoin’s rise in the near to mid-term. This influx of USDT could lead investors to buy more Bitcoin, thereby increasing buying pressure and causing the price to surge. However, it is important to note that this does not guarantee sustained growth or protection against market corrections.
In terms of market dominance, Tether currently leads the stablecoin industry with over 70% of the $142 billion market, while Circle’s USDC holds 19.4%. Despite its success, Tether has faced scrutiny regarding its transparency and reserves. In 2021, the company settled a complaint with US regulators and paid more than $40 million for falsely representing its collateral.
Furthermore, OKX crypto exchange has recently delisted USDT for its EU customers due to tighter regulations. However, Tether has taken steps to enhance its consumers’ security and accessibility by launching a blockchain recovery tool. This tool allows for the migration of USDT between blockchains in the event of outages, ensuring uninterrupted accessibility for users. This initiative demonstrates Tether’s commitment to resilience and user protection in the crypto market.